Business Irish

Tuesday 20 February 2018

Enda Kenny upbeat after EU leaders agree ECB to supervise banks

Taoiseach Enda Kenny speaks with Sweden's Prime Minister Fredrik Reinfeldt and German Chancellor Angela Merkel
Taoiseach Enda Kenny speaks with Sweden's Prime Minister Fredrik Reinfeldt and German Chancellor Angela Merkel

Fionnan Sheahan in Brussels

TAOISEACH Enda Kenny doesn't have to worry about any EU referendum being on the horizon - for at least two years, anyway.

EU leaders have agreed a compromise deal on creating a common European banking supervisor.

Mr Kenny and his counterparts backed a landmark deal to hand the European Central Bank (ECB) responsibility for supervising banks.

At the close of the first days of an EU leaders summit in Brussels, German Chancellor Angela Merkel said leaders did not discuss any proposals for changes to EU Treaties to strengthen economic and monetary rules.

"I don't think we will have that before the elections to the European Parliament," she said.

The European Parliament elections take place in June 2014. Even if there were talks at that point about treaty change, it would be some time before anything would come about.

The Government is always highly sensitive about any mention of treaty change as it often needs to be ratified through a referendum.

The EU will also decide next year on the exact definition of what are "legacy assets" - a move that will have consequences for Ireland in its pursuit of a bank debt deal.

The discussion will happen during Ireland's EU Presidency, which begins on January 1st.

European Council President Herman van Rompuy said it was agreed to establish in the first half of next year the "definition of legacy assets".

This would pave the way for the recapitalisation of some banks by the new EU bailout fund.

The question of what exactly are legacy assets - or old bank debt - has never been resolved.

Also last night, Chancellor Merkel said bank resolution must not come at the taxpayers' expense.

The heads of Government met in Brussels to discuss the supervisory scheme just hours after finance ministers sealed the deal at an all night session.

The Taoiseach said yesterday that agreement to create a common European banking supervisor will not mean an immediate cut in the €64bn cost to taxpayers of rescuing the banks.

Reaching a point where Europe's bailout fund takes over some of the costs of our banking rescues will take some time, Mr Kenny said.

It may well be 2014 before the deal reached yesterday translates into a tangible deal on the Irish banks, he said.

But it is a step in the right direction, he said.

EU leaders signed off on the creations of a Single Supervisory Mechanism (SSM) to oversee hundreds of the the euro areas biggest banks, probably from 2014.

It will be led by the European Central Bank and will also 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.

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business