Merkel and Sarkozy agree on bank support
Germany and France are resolute in their wish to protect Europe’s banks from the ongoing sovereign debt crisis, the countries’ leaders said on Sunday.
Angela Merkel and Nicolas Sarkozy made the announcement in Berlin yesterday they would produce a convincing and broad package to this end by month’s end.
In a move that could boost markets at the start of this week, Merkel included the need to ensure banks are properly recapitalised.
Both of the eurozone’s two largest economies are “completely agreed” on this, the duo said. They also professed to be at one over the bailout fund, whose enlargement of assets and powers is still being voted on by eurozone member parliaments.
Malta and Slovakia are to vote soon.
German finance minister Wolfgang Schaeuble told the Frankfurter Allgemeine Zeitung‘s Sunday edition there was “a high risk” of the crisis expanding and peaking again if it was not sorted out by politicians.
“Perhaps in July we started off with thoughts of too small a reduction in the debt ratio,” he said of Greece.
The head of the opposition SPD party in Germany called on the government to make support of banks in the crisis dependent on strict regulation of them and financial entities.
He told the FAZ: “We cannot save the banks for a second time without putting them right. We need markedly more robust forms of regulation.”
However the German press on Sunday noted disagreement between Berlin and Paris about when the rescue fund should be engaged to recapitalise Europe’s banks.
Berlin wants to wait to see if the banks can raise their own capital from public markets before the EFSF acts to help states in which the banks are located.
But Paris fears it will lose its top credit rating if France is forced to support its banks heavily involved in Greece.