PARIS (MNI) – The European Commission’s proposal for a Eurozone
banking union foresees a step-by-step extension of coverage starting
with publicly controlled banks at the start of next year, Michel
Barnier, the commissioner for the internal EU market, said in a
newspaper interview published Friday.

Big banks with potential systemic impact would be brought under
supervision by an independent council within the ECB by mid-year,
Barnier told the French business daily Les Echos. By the start of 2014,
some 6,000 Eurozone banks would be integrated into the new system.

Commission President Jose Manuel Barroso indicated Thursday that he
would unveil details of the plan on September 12.

By targeting banks under public support first, the proposal would
allow an eventual recapitalization via the European Stability Mechanism
at an early stage, Barnier explained.

“Thanks to the possibility of recapitalizing the banks directly by
the European bailout funds, we are cutting the link that adds banking
debts to those of the sovereigns,” he said.

The council for bank supervision within the ECB would be separated
from the Governing Council, Barnier said. “The president of the
supervisory [body] will be accountable to the European Parliament in
order to permit democratic control over this new organism.”

Supervisory matters without consequence for financial stability,
like consumer protection, would be left to national supervisors, he

Barnier said he hoped that after a “sincere” public debate on the
proposal there would not be resistance from certain members of the EU.
The Commission is working on the possibility to allow banks of
non-Eurozone member states to be brought on board “on a purely voluntary
basis,” he said.

Proposals will also be submitted for the creation of a European
deposit guarantee fund and a fund for the resolution of banking crises,
the commissioner said. To allow for greater integration, there will also
be proposals “rather quickly” to “to go further towards solidarity among
the guarantee funds.”

–Paris newsroom +331 4271 5540; e-mail:

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