* EU summit on Dec. 13-14 to discuss banking union
* Van Rompuy, Barroso want backing for ECB to be bank
* Political agreement foreseen, details to be worked out
By Luke Baker
OSLO, Dec 10 European Union leaders are likely
to give political backing for the European Central Bank to be
made the single supervisor of euro zone banks later this week,
EU officials said on Monday, even if the final details may not
be agreed until next year.
Leaders meet in Brussels on Thursday and Friday for their
last summit of the year, with the focus on setting up a 'banking
union' across the euro zone and wider EU, a plan built around
the ECB taking lead responsibility for banking oversight.
Herman Van Rompuy, the president of the European Council who
will chair the Dec. 13-14 summit, said he was hopeful that
leaders would give their backing to the scheme, and EU officials
speaking on condition of anonymity said they expected "political
agreement" at the summit with the details worked out later.
"I still hope and I'm quite sure that we'll find a solution
on the legal framework before Christmas, before the end of the
year," Van Rompuy told reporters in Oslo, where he received the
Nobel Peace Prize on behalf of the European Union.
"There's work to be done, but I have a lot of indications
that there is the political will to find a solution for the
single supervisory mechanism."
Twenty EU heads of state and government were in Oslo to
attend the Nobel prize giving and took the opportunity to
discuss the economic crisis over lunch, officials said.
German Chancellor Angela Merkel emerged from those talks
saying she felt "more courageous" about tackling the problems EU
governments face, but didn't go into details.
Germany is one of the main obstacles to a deal on the ECB
taking responsibility for monitoring the euro zone's banks.
German Finance Minister Wolfgang Schaeuble last week raised
concerns about how the ECB, which is based in Frankfurt, could
balance its monetary policy responsibilities with overseeing up
to 6,000 banks, a detailed and time-consuming task.
Germany's regional banks and savings institutions are also
reluctant to be regulated by an 'external' authority rather than
Germany's own banking regulator, with which they work closely.
At a summit in June and again in October, EU leaders said
they were committed to getting the legal framework for the
single supervisory authority completed by the end of 2012 so
that the ECB could gradually take responsibility for banks
through the course of next year.
The aim was the complete the supervision process in a year,
with the goal of the ECB being fully in charge by Jan. 1, 2014,
at which point it would be possible for troubled banks to be
directly recapitalised from the euro zone's rescue fund.
If leaders give political backing to the plan at the summit,
it will still take time for the European Parliament to give its
assent and for other legal steps to be taken, meaning that
realistically the process will not be complete until early 2013
even if the sign off has been given by leaders.
Jose Manuel Barroso, the president of the European
Commission, the EU's executive, said EU leaders couldn't afford
to procrastinate and said he hoped they would back the
Commission's banking union proposal this week.
"I'm urging governments to agree on the basis of the
European Commission proposal for the banking union, the first
step being precisely this single supervisory mechanism," he told
Reuters ahead of the Nobel prize giving ceremony.
"There is a risk that because of the relatively calmer
situation in the markets we have been feeling the last months
there is probably less sense of urgency in some capitals.
"I don't like to comment on timings, sometimes the most
important is the sense direction... The critical element is for
investors to have no doubt about the determination in the euro
area to do what is necessary to protect financial stability."