20 Oct 2012

EZ banking agency to be formed

5:01 am on 20 October 2012

Eurozone leaders in Brussels have agreed on a timetable for establishing a single supervisory agency to oversee all 6000 banks inside the eurozone.

The deal appears to be a compromise between France and Germany, which had disagreed over the timing and the number of banks that the European Central Bank would oversee.

The ECB will have the power to intervene in any of the banks.

A legislative framework is to be in place by 1 January, with the agency starting work later in 2013.

When it is fully operational, the European Stability Mechanism will be able to recapitalise struggling banks directly, without adding to a country's sovereign debt.

The BBC reports a priority is to rescue weak banks in Spain, where a recent audit put the bailout requirement at 59.3 billion euros (£48.3 billion).