HIGHLIGHTS-Comments from EU leaders' summit

BRUSSELS Thu Oct 18, 2012 9:56pm EDT

BRUSSELS Oct 19 (Reuters) - EU leaders met in Brussels for two-day talks intended to try to bridge deep differences over plans for a banking union.

The meeting, which will resume later on Friday, was the fourth for EU leaders this year and the 22nd summit held since the crisis erupted in Greece in late 2009.

Following are comments by EU leaders and officials after the talks, which ran into the early hours on Friday:

FRENCH PRESIDENT FRANCOIS HOLLANDE

ON THE EURO ZONE CRISIS:

"We are on track to solve the problems that for too long have been paralysing the euro zone and made it vulnerable.

"If the December European summit confirms the decisions we took, if Greece finds a lasting solution, if Spain recovers funding mechanisms, then we will be done with a situation which weighed on markets and on the confidence in the euro zone."

"Everything is not over. We still need to recover confidence and restore growth. Tonight, I again have confirmation that the worst is behind us."

ON BANKING UNION:

"Europe is not getting delayed, it is speeding up the agenda that was set up in June."

ON A POTENTIAL AID REQUEST FROM SPAIN:

"This was not discussed tonight."

GERMAN CHANCELLOR ANGELA MERKEL

ON EUROPEAN CENTRAL BANK (ECB) ROLE IN BANKING SUPERVISION:

"We have confirmed that the banks must be supervised in a differentiated way. That means that some will be direct... at the ECB level and others indirectly, via the national authorities."

"Mario Draghi, the ECB President, said that it will take a certain amount of time to install this bank supervision. He did not specify how many months, but it's not a matter of one or two months. It takes longer."

ON MECHANISM FOR BANK SUPERVISION:

"We give our finance ministers the ambitious task of establishing a legal framework (for supervision) by Jan. 1, 2013. This banking supervision will then be built up in the course of 2013.

"When it concerns the direct recapitalisation of the banks, then we confirmed the position that the practical completion of the banking supervision must be complete before a direct recapitalisation of banks can be considered.

"Our goal is a bank supervision worthy of the name."

ON COORDINATING ECONOMIC POLICY:

"...I have said that we need more economic policy coordination. This economic policy coordination should happen through agreement between the Commission and the member states.

"For the implementation of certain measures, I have said that there could be an instrument, an instrument of solidarity."

EUROPEAN COMMISSION PRESIDENT JOSE MANUEL BARROSO

ON BANKING SUPERVISION:

"Today we have discussed the main open issues on the adoption of the single supervisory mechanism (SSM), and the European Council has confirmed the key principles."

"We will now work to finalise agreement on the legislative framework before the end of the year."

"Delivering this (SSM by the end of the year) will enable us to honour the June 29 agreement of the euro area summit on the direct recapitalisation of banks, and tonight we confirmed what we agreed in the June European Council.

"I now expect finance ministers to follow the positions of heads of state and government and work to complete the technical details as quickly as possible."

EUROPEAN COUNCIL PRESIDENT HERMAN VAN ROMPUY

ON BANKING SUPERVISION:

"The urgent element now is setting up a single supervisory mechanism to prevent banking risks and cross-border contagion from emerging, and that's why the European Council called tonight for swift progress, with the objective of agreeing on the legislative framework by Jan. 1, 2013.

"Once this is agreed, the single supervisory mechanism could probably be effectively operational in the course of 2013."

LUXEMBOURG'S PRIME MINISTER AND EUROGROUP HEAD JEAN-CLAUDE JUNCKER

ON SPANISH BANK RECAPITALISATION:

"It is an important question for Spain it is an important question for the euro area... and we will make a decision on Spain in the next couple of weeks."

Following are earlier comments by EU leaders and officials ahead of the talks:

GERMAN CHANCELLOR ANGELA MERKEL

ON BANKING UNION:

"We've got to work very fast, but also very thoroughly."

SWEDISH PRIME MINISTER FREDRIK REINFELDT

ON BANKING SUPERVISION:

"It's better to get things right than to rush things. These are complicated matters and there are a lot of questions that need to be answered legally, but also when it comes to how do you answer to what happens in a bank that has problems.

"Who is recapitalising the bank, who is paying? If you don't have the answers to that then you don't have a proposal that is finished."

ON POSSIBLE EURO ZONE BUDGET:

"We are not part of the euro zone. I think it has been perceived differently in different countries. I know that it might be a German idea to link incentives to reforms needed in different countries.

"I think it's more for the euro zone to answer if they want to have something. We will have a huge discussion in November about the EU 27 budget. That's my main focus."

FRENCH PRESIDENT FRANCOIS HOLLANDE

ON CURRENT ECONOMIC CIRCUMSTANCES:

"This Council is taking place in very hard social and economic environment, with growth figures that are not acceptable either for Germany or France - but which is not under pressure from the markets."

ON RELATIONS BETWEEN FRANCE AND GERMANY:

"We have a common responsibility, France and Germany, which is to bring the euro zone out of the crisis that we have been going through for two-and-a-half years now."

ASKED EARLIER ABOUT THE PROPOSAL FOR A SUPER COMMISSIONER WITH A RIGHT OF VETO OVER NATIONAL BUDGETS:

"The topic of this summit is not the fiscal union but the banking union, so the only decision that will be taken is to set up a banking union by the end of the year and especially the banking supervision. The other topic is not on the agenda."

CZECH PRIME MINISTER PETR NECAS

ON BANKING UNION:

"The date of Jan. 1 next year is an unnecessarily ambitious date."

"We prefer quality ahead of speed. I don't think this should be adopted 'salami style' but rather as a whole package."

ON GERMAN PROPOSAL FOR NEW COMMISSIONER WITH BUDGET POWERS:

"I have to say that we are very cautious when it comes to creation of new institutions.

"We already have many of them and should concentrate on how to make them more efficient."

EARLIER, COMMENTS ON A EURO ZONE BUDGET TSAR/SUPER COMMISSIONER:

"I would not say it would be a good idea. We have enough instruments to improve fiscal discipline, we've got the six pack, we'll have the two pack, we have the fiscal compact, and I don't see any reason to increase the number of commissioners."

BELGIAN PRIME MINISTER ELIO DI RUPO

ON HOPES FOR THE SUMMIT:

"We need to work to change the climate, bring back confidence for investors and citizens... We need to do what we decided on the pact for growth and jobs, on the banking union, send clear signals to Spain and Greece to prevent the euro zone being in a bad situation."

DUTCH PRIME MINISTER MARK RUTTE

ON IDEA OF SEPARATE EURO ZONE BUDGET:

"The idea of strengthening budget discipline always has our support. We have a lot of questions about separate budgets because there is already a EU budget and we want to know what such a budget entails for the budget we already have and the payments the Netherlands and other countries have to make to it.

"Tonight I will only ask questions, that is the idea of the summit, to see what the proposals of (EU Council President Herman) Van Rompuy are exactly. I can't say yes or no to proposals that have not been completed."

FINNISH PRIME MINISTER JYRKI KATAINEN

ON BANKING UNION:

"I hope everybody shares the big picture that we should be capable of separating sovereigns from the banking crisis.

"Of course there are some practical challenges still, for instance how to integrate the outside the euro zone countries into the arrangement, and this is very important for Finland.

"We need to create a system in which all the member countries can join."

ON WHEN EFFECTIVE BANKING SUPERVISION COULD BE IN PLACE:

"It's not a question of one or two days or weeks. The quality of the decision is the most important thing. But we want to move on as fast as we can.

"The Finnish position is that we have to work as fast as possible, because we need a European supervision and supervisory body, but it's not the most easy thing to create.

"So that's why the quality of the decision is the most important thing."

BRITISH PRIME MINISTER DAVID CAMERON

ON SINGLE MARKET AND COMPETITIVENESS OF EUROPEAN UNION:

"There is a global race taking place, and some countries are going to make it and some countries are going to struggle and there is a danger of European countries and the European Union falling behind.

"So I think what is absolutely vital is that we encourage enterprise, we cut the costs of regulation on our businesses, we do trade deals with the some of the biggest economies in the world like America, like Japan, and with fast-growing countries as well.

"And finally, perhaps most importantly, we look at the greatest asset we've got, which is the single market, which is the single biggest market anywhere in the world, and we complete that market.

"It is its 20th anniversary right now, but it still isn't finished, in digital, in services, in energy, and that is the agenda I'll be pushing very hard at this council."

AUSTRIAN CHANCELLOR WERNER FAYMANN

ON THE POSSIBILITY OF A EURO ZONE BUDGET:

"I actually don't think that we need a euro zone budget. With the financial transaction tax (FTT) not all countries are with us.

"I would prefer if we focused on how we could integrate the FTT and other measures into the new common budget, against youth unemployment."

EU ECONOMIC AND MONETARY AFFAIRS COMMISSIONER OLLI REHN

ON POSSIBILITY OF CURRENCY COMMISSIONER WITH POWER OVER BUDGETS:

"These proposals are in line with recent and ongoing reforms of economic governance and certainly will be a key element of negotiations towards a stronger economic union."

ON BANKING UNION AND SUPERVISION:

"It is very important that the summit now maintains the momentum of reforming the economic and monetary union including the banking union and, first of all, the single supervisory mechanism (SSM) for euro zone banks, which is related to direct bank recapitalisation, which is critical to break the vicious circle between sovereigns and banks."

ON TIME-SCALE FOR BANKING SUPERVISION MECHANISM:

"I believe it is realistic to finish work on the SSM by the end of the year, it is a matter of political will. Now the political will of member states is tested. I trust there is the will. In fact, if the member states and (European) Parliament work as intensively in the coming weeks, as the European Commission worked during the summer break, then I am sure this work can be concluded by the end of the year.

"It is essential that all EU member states and the EU Commission stick to the commitment undertaken during the summit in June. It gives precise political guidance in that regard (on when the SSM should be ready), the entry into force and start of operation for the single supervisory mechanism for euro zone banks is a necessary, but not alone sufficient condition for direct recapitalisation of banks."

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