Thursday

1st Jun 2023

Merkel, Sarkozy will do ‘whatever necessary’ to bail-out banks

Financial markets hoping for the outline of some grand strategy for dealing with the ever-worsening eurozone crisis are likely to be disappointed by the vague announcement offered up by the French president and German chancellor after emergency talks in Berlin on Sunday (9 September).

"We are very conscious that France and Germany have a particular responsibility for stabilising the euro," said Nicolas Sarkozy alongside Angela Merkel.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"We need to deliver a response that is sustainable and comprehensive. We have decided to provide this response by the end of the month because Europe must solve its problems by the G20 summit in Cannes."

“By the end of the month, we will have responded to the crisis issue and to the vision issue,” he said.

Merkel for her part said that they would issue no details on the matter before the end of the month.

The pair did however say that they are committed to a second bail-out of the European banking system, with Merkel stressing that the pair will do “whatever is necessary for the recapitalisation of our banks”.

The International Monetary Fund last week estimated the cost for such a move to come to €200 billion - a high sum for European citizens still angry at multi-billion bail-outs of financial institutions at the start of the crisis that dragged down the balance-sheets of governments across the bloc.

But neither Merkel nor Sarkozy offered any news as to whether the pair had reached agreement on where the funds would come from - the eurozone’s bail-out fund or national governments themselves.

France favours a deployment of the European Financial Stability Facility (EFSF) for bank recapitalisation - in effect sharing the burden of bailing out national banks across the eurozone, while Germany feels that this should only be a final recourse, should national governments not be in a position to do so.

The pair would also not be drawn on whether any resolution had been achieved over their differences on the question of whether Greece should be allowed to default.

“We are working closely together on Greece,” said Merkel.

“On Greece, we are waiting of the troika report,” was all the French president said. “Here, too, we are on the same line: we will take the appropriate decisions.”

Bank drain threat hangs over eastern Europe

With large parts of their banking sector in French, Austrian or Greek hands, eastern European countries are wary that upcoming rules on bank recapitalisation will allow regional subsidiaries to be drained of money, putting their economies at risk.

Banks, Europe haggle over scale of bond haircut

The world’s banks have delivered a “significant” new offer on the scale of a haircut on their holdings of Greek sovereign debt, but no details have appeared since their earlier stance described by one EU diplomat as “playing hardball”.

EU: national energy price-spike measures should end this year

"If energy prices increase again and support cannot be fully discontinued, targeted policies to support vulnerable households and companies — rather than wide and less effective support policies — will remain crucial," the commission said in its assessment.

Opinion

EU export credits insure decades of fossil-fuel in Mozambique

European governments are phasing out fossil fuels at home, but continuing their financial support for fossil mega-projects abroad. This is despite the EU agreeing last year to decarbonise export credits — insurance on risky non-EU projects provided with public money.

Latest News

  1. EU data protection chief launches Frontex investigation
  2. Madrid steps up bid to host EU anti-money laundering hub
  3. How EU leaders should deal with Chinese government repression
  4. MEPs pile on pressure for EU to delay Hungary's presidency
  5. IEA: World 'comfortably' on track for renewables target
  6. Europe's TV union wooing Lavrov for splashy interview
  7. ECB: eurozone home prices could see 'disorderly' fall
  8. Adapting to Southern Europe's 'new normal' — from droughts to floods

Stakeholders' Highlights

  1. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  2. ICLEISeven actionable measures to make food procurement in Europe more sustainable
  3. World BankWorld Bank Report Highlights Role of Human Development for a Successful Green Transition in Europe
  4. Nordic Council of MinistersNordic summit to step up the fight against food loss and waste
  5. Nordic Council of MinistersThink-tank: Strengthen co-operation around tech giants’ influence in the Nordics
  6. EFBWWEFBWW calls for the EC to stop exploitation in subcontracting chains

Join EUobserver

Support quality EU news

Join us