Eurozone crawls towards bank oversight

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Eurozone crawls towards bank oversight

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Eurozone leaders have agreed there will be a single supervisor responsible for overseeing the region’s banks from next year, but the details of how that watchdog will operate has still to be hammered out.

This does open the way for the eurozone’s rescue fund to inject capital directly into ailing banks next year, but a decision on whether Spain can transfer some of its banking liabilities off the government’s books is delayed for now.

Officials said 6,000 lenders will eventually be included and the slow process starts with the legal framework being established by December.

The supervisor should be operational some time next year with ECB oversight in place by 2014.

Berlin has been reluctant to see its politically sensitive savings and cooperative banks come under outside supervision.

The fear is this could be the first step to either the German state or its banks underwriting troubled lenders in poorer eurozone countries.