BRUSSELS Oct 19 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