European Union (EU) leaders are making progress on forming the EU’s unified banking system, agreeing on Friday 19 October that a single supervisor will be chosen rather than a committee to take responsibility for oversight next year.
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The decision clears the way for the European Stability Mechanism (ESM) to inject capital directly into the banks of distressed member countries. The decision of whether to allow Spain to transfer some of its banking liabilities off of its government’s balance sheet is being reserved for 2013.
European finance ministers agreed to adopt an operating agreement by the end of the year that gives the European Central Bank (ECB) general oversight responsibility, consulting with national bank regulators.
What type of representation non-Eurozone banks who decide to join in would have has been a sticky issue that was not addressed on Friday. It will have to be decided by the end of the year.
German Chancellor Angela Merkel said it would take more than two months to get the new supervisor in place and direct bank capitalization
could be enacted.