Published October 19, 2012
BERLIN – German media dubbed European Union leaders' agreement on a single European banking supervisor hammered out in Brussels overnight a "victory on points" for Angela Merkel, judging she had persuaded peers to proceed at a slower tempo.
The 27 leaders agreed to adopt a legal framework by the end of this year giving the European Central Bank overall responsibility for banking supervision, with the new mechanism going into operation during the course of 2013.
The French and southern European countries had wanted the new supervisory body to be up and running by January, in part because that would be a trigger for Europe's new rescue fund, the European Stability Mechanism (ESM), to begin injecting aid directly into struggling banks.
"Merkel puts the brakes on Hollande over banking union," Sueddeutsche Zeitung said on its website. "Merkel stalls hurrying Hollande," said Spiegel Online, while Die Welt newspaper more cautiously branded the banking deal a "1-1 draw" for the French and German leaders.
German officials had been saying ahead of the summit that nothing would be operational before 2014.
"We give our finance ministers the ambitious task of establishing a legal framework (for supervision) by January 1, 2013. This banking supervision will then be built up in the course of 2013," the chancellor told reporters in Brussels.
"Our goal is a bank supervision worthy of the name."
Merkel and her finance minister, Wolfgang Schaeuble, had long argued that quality must take precedence over speed in setting up the new regulator.
A French government source said the European Stability Mechanism (ESM) could start recapitalising troubled banks as early as the first quarter of 2013, but a German source said it was "very unlikely" to happen so soon.
Commenting on the timetable, Hollande said: "Europe is not getting delayed, it is speeding up the agenda that was set up in June."
Markus Soeder, finance minister in the state of Bavaria and a conservative ally of Merkel, told German television early on Friday: "It is a definite victory on points for us."
"The time-frame has been chosen well. Things really do need to be worked out carefully."
Merkel said leaders had agreed banks must be supervised in a differentiated way, meaning some would be policed at the ECB level and others indirectly, via the national authorities.
Commentators abroad saw the deal as a defeat for Schaeuble's efforts to limit the scope of banking supervision but the German media said Berlin's reluctance to see politically-sensitive savings and cooperative banks come under outside supervision had prevailed.
(Reporting by Berlin bureau; Writing by Alexandra Hudson; editing by Patrick Graham)