LONDON Dec 10 The European Central Bank would
only supervise euro zone banks on a day-to-day basis if they had
assets of more than 30 billion euros, European Union president
Cyprus said in a draft compromise aimed at easing German
The bloc's finance ministers meet on Wednesday to try and
broker a deal on the first step towards a banking union, for
their leaders to endorse at a summit in Brussels on Thursday and
Friday to meet a self-imposed end of year deadline.
Germany only wants the ECB to supervise larger banks --
leaving its savings banks in particular still under local
supervision -- while France and other member states say it
should have powers to intervene in any of the euro zone's 6,000
The draft proposes that a euro zone bank would not be
considered "significant", meaning it would come under direct ECB
oversight, unless it had assets worth more than 30 billion euros
($39 billion), or assets worth more than a fifth of the home
country's economy, or the bank operated in at least three euro
German deputy finance minister Steffen Kampeter told
reporters in Berlin that banks that did not present a systemic
risk should remain under the oversight of national authorities.
"We don't want all the banks lumped together," he said.
Cross-border supervision -- the first step towards a banking
union -- is likely to come into full effect from the start of
2014 and is seen as key to ending a five-year banking crisis.
It would allow banks to receive money directly from a new
rescue fund rather than see already heavily-indebted countries
going further into the red to shore up a lender.
If the 30 billion euro threshold is approved, it would mean
all but one of the German savings banks, would be excluded from
the ECB's direct oversight. Most of Germany's cooperative banks
would also be excluded.
The ECB, however, could still "at any time, on its own
initiative or upon request by a national competent authority"
decide to intervene directly in a euro zone bank that was deemed
not to be significant.
The Cypriot plan also seeks to smooth Britain's concerns
that the ECB could use its clout as a supervisor to harm the UK
financial services sector, the EU's biggest and which will not
be part of the banking union.
The draft says the Frankfurt-based central bank could not
discriminate against any member state for the provision of
banking or financial services in any currency.
Britain has taken the ECB to the European Court of Justice
to try and quash an ECB policy of requiring clearing houses that
handle large amounts of euro denominated business to be based in
the euro zone.
There is still, however, no agreement in the compromise on
how the ECB's board of supervisors would take decisions, with
Britain pushing for "out" countries to have a say.
Critics say the banking union with just the ECB at its core
will ultimately be ineffective unless there is also a single
resolution authority and common bank deposit guarantees, two
elements that will be even harder to agree on than the ECB's
role and which are not even under discussion yet.