Framework for banking union by end of 2012
European Union leaders, according reports from Reuters, have agreed on a legal roadmap to establish a single bank supervisor for the union. A text of draft conclusions on the first day of talks in the ongoing EU summit in Brussels said leaders struck a deal on "the objective of completing the legal framework by the end of the year" with implementation "in the course of 2013", Reuters said. EU Economic and Monetary Affairs Commissioner Olli Rehn commented, cited by Reuters, that reaching such deal is key "to break the vicious circle between sovereigns and banks". Framework for banking union by end of 2012, completion by early 2014, and is to cover 6,000 banks, according to a French official.
They added that potential for direct bank recapitalization from bailout funds in 2013. However, the German counterparts have denied that bank recapitalization can take place in early 2013. From German government source cited by Reuters: "Direct recapitalization of banks in first qtr of 2013 is ‘very unlikely’. Can only begin once an effective single banking supervisor is in place. ECB will be responsible for systemically important banks, but will oversee other banks if necessary. There will be a mix of supervision between ECB and national supervisors." Frictions between Germany and France on how to go about the banking supervisor authority had been a troubling sticking point, with German Chancellor Angela Merkel demanding stronger authority to veto national budgets that breach EU rules, while French President Francois Hollande had been more supportive of moving towards a European banking union.
