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EU leaders push for fast-track clampdown on banking

Published 03/26/2010, 07:12 AM
Updated 03/26/2010, 07:16 AM

* Heads of state demand "rapid progress" in bank regulation

* Call comes at meeting that decided aid scheme for Greece

* Politicians blame economic spiral on banks

By John O'Donnell

BRUSSELS, March 26 (Reuters) - European leaders called on Friday for faster regulation of bankers, their pay and the way they do business at a meeting that agreed how the EU will help Greece, sucked into a global crisis many blame on financiers.

The economic slump, triggered when banks lost control of loans they had repackaged and sold, has put the regulation of financial services at the top of the political agenda.

The European Union is pushing through a raft of rules, from curbing banker pay to demanding that lenders set aside more money for difficult times.

On Friday, leaders including German Chancellor Angela Merkel and French President Nicolas Sarkozy outlined their ambitions in a draft statement during an EU summit in Brussels.

They called for "rapid progress" on rules for the amount of capital banks are required to keep, coping with lenders deemed "too big to fail" and increasing transparency on derivatives markets.

The statement also said the executive European Commission would present a report soon on potential sources of finance such as a levy on financial transactions worldwide.

The leaders from the EU's 27 countries also signalled a desire for cooperation between Brussels and Washington in tackling financial services regulation, talking about the need for a level playing field globally.

Earlier this month, a row flared between Europe and the United States over how Brussels wants to regulate hedge funds and private equity. A last-minute intervention by British Prime Minister Gordon Brown put the planned EU law on hold.

The delay disappointed many lawmakers, who believe it throws a question mark not only over the EU's ability to control hedge funds but also to push ahead with a regulatory shake-up of financial services.

On Thursday, leaders from the 16 EU countries that use the euro agreed to create a safety net with the International Monetary Fund to help debt-ridden Greece. (Editing by Dale Hudson)

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