EU bank regulator won't lead to early debt deal – Kenny
Published 14/12/2012 | 05:00
TAOISEACH Enda Kenny warned last night that the agreement to create a common European banking supervisor will not mean an immediate cut in the €64bn cost of rescuing our banks.
Mr Kenny said he expects European lenders to back a landmark deal to hand the European Central Bank (ECB) responsibility for supervising banks.
He made the comments as heads of government gathered in Brussels to discuss the scheme only hours after finance ministers sealed the deal at an all-night session.
However, reaching a point where Europe's bailout fund takes over some of the costs of our banking rescues "will take some time", he said.
It "may well be 2014" before the deal reached yesterday translates into a tangible deal on the Irish banks, he added, while praising the deal as a step in the right direction.
"We have always said the legal framework should be in place," he said. "The important thing is a decision is now made."
Finance ministers agreed to create a Single Supervisory Mechanism (SSM) to oversee hundreds of the euro area's biggest banks, probably from 2014. The SSM will be led by the ECB and will have power to act if smaller lenders are seen as a risk to the financial system.
The common banking authority will take charge of banks across the euro area and any other EU country that wants to join.
The deal to establish the new authority was reached after 14 hours of talks when the UK and other non-euro countries won concessions they hope mean their banks are not put at a disadvantage by the plans.
The agreement is seen as a major step towards the creation of a Europe-wide bank union to mirror and enhance the single currency.
For Ireland, shared responsibility for banking is seen as a step closer to sharing the costs of banking failures.
The debate on just how that will work will now get under way in earnest, including how much of the cost of the Irish rescues will be lifted from taxpayers here.
European Commission President Jose Manuel Barroso said: "We need to keep the momentum, keep the determination, keep the focus, and that is going to be my message to leaders."
The Taoiseach said the agreement is a sign that Europe can take collective action when needed.
"It is important for citizens to see that decisions made are followed through," he said.
The creation of the banking supervisor is seen as one of three prongs needed for an effective banking union.
The other two are the creation of a Europe-wide system for closing down bust banks without causing financial chaos and agreement on who pays for failures.
ECB president Mario Draghi said the deal on banking supervision is an "important step" towards a stable economic and monetary union.
EU commissioner Olli Rehn said the deal proved wrong those "Cassandras" who had predicted disaster for the euro.