Europe reaches deal to complete banking union

BRUSSELS, March 20 Thu Mar 20, 2014 4:52am EDT

BRUSSELS, March 20 (Reuters) - European Union negotiators agreed on Thursday to complete Europe's banking union with a new agency to shut euro zone banks that are too weak to survive and a fund to help cover the costs, according to a draft agreement.

All-night talks ended a stand-off between the European Parliament and euro zone countries over the new scheme, completing the second leg of banking union after supervision by the European Central Bank.

The details of the compromise are outlined in a draft agreement and were confirmed by people involved in the talks.

Under the compromise reached, a fund made up by levies on banks will be built up over eight years, rather than 10 as originally envisaged. It will also be possible for countries to share 40 percent of the fund from its first year.

The deal also envisages giving the European Central Bank the primary role in triggering the closure of a bank, making it harder for the new 'resolution' agency to do so and limiting the scope for country ministers to challenge such a move. (Reporting By Tom Koerkemeier and John O'Donnell; editing by Adrian Croft)

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