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ESM bank recapitalisation to start in 2013 -French govt source
BRUSSELS Oct 19 (Reuters) - Direct recapitalisation of troubled banks by the European Stability Mechanism bailout fund could be a reality for some lenders at the end of the first quarter of 2013, a French government source said on Thursday.
The source, briefed on talks between European Union leaders in Brussels, said a deal had been reached at the summit on having a legal framework for a banking union by the end of 2012, with the aim of putting 6,000 European banks under direct supervision of the European Central Bank by early 2014.
"There is a deal on banking supervision. The legal framework will be adopted by end-2012 and the ECB will assume the supervision progressively during 2013," the source said, speaking on condition of anonymity.
"Direct recapitalisation will be possible once the supervision is in place, which means we're hoping to do it in 2013... January or February, I would not bet on it. At least the first quarter (will be needed) to make it become a reality."
The source also said Germany was ready to discuss the possibility of transferring under the umbrella of the ESM legacy assets from banks currently under state aid or being recapitalised before the single supervision system is in place.
The source said one solution for dealing with legacy assets of banks could be to split the burden between the states and the ESM bailout fund, under conditions yet to be defined by finance ministers.
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