Europeans offer support, sympathy for Manchester attack
BRUSSELS The leaders of Europe sent Britain offers of support and sympathy following the suicide bombing of a pop concert in Manchester overnight that killed 22 people, including children.
BRUSSELS/LONDON The European Central Bank should have power to police, penalise and even close banks across the euro zone, the European Commission will say next week when it fleshes out plans for a banking union to tackle the region's debt crisis.
The move is part of wider efforts to prevent problem banks, such as Spain's Bankia, from sucking weak euro zone countries deeper into the crisis as they borrow to finance bailouts and is a step towards the economic integration needed to secure the single currency's future.
Commission President Jose Manuel Barroso will on Wednesday set out proposals for the ECB to supervise the euro zone's 6,000 banks, putting it at the head of the current fragmented system of national regulators and reducing their role.
The ECB could get power to closely monitor banks' liquidity and impose higher requirements on banks to hoard capital, according to a draft proposal, which was published on the internet by the Italian newspaper Il Sole 24 Ore on Friday.
The Commission hopes that tighter surveillance of banks by the ECB, followed by the creation of a fund to wind up troubled lenders and a common pan-European guarantee for depositors, can restore confidence in the region after five years of financial crisis.
"Banking union is one of the issues that can demonstrate that the euro zone is getting its act together," said Ken Wattret, an economist at BNP Paribas.
A banking union will require countries to surrender a degree of sovereignty over their lenders, a prospect politicians in several countries are suspicious of.
Britain has decided not to join although many international banks in London with operations in the euro zone will nonetheless be affected by the ECB's new supervisory reach.
The ECB would be able to shut a struggling bank, if euro zone states agree to the sweeping new powers.
In the draft document, officials write: "The ECB should ... have the task to authorise credit institutions and should be responsible for the withdrawal of authorisations." National authorities would also have to be involved.
Germany, the euro zone's economic heavyweight, is opposed to allowing the ECB supervise all euro zone lenders.
Berlin claims the central bank will be overstretched if it has to monitor all 6,000 euro zone banks. Commission officials argue that even small banks can spark a crisis, as happened at Britain's Northern Rock.
The draft document lays down a phasing in of this supervision over one year and says the ECB should be able to police all banks. The ECB should begin monitoring half of the euro zone banking sector from the middle of next year.
This move would allow for the direct recapitalisation of euro zone banks from the region's permanent rescue fund, the ESM, which could have immediate benefits for Spain and its troubled banking sector.
Once that step is complete, work would begin on getting approval for a pan-European resolution scheme to wind up stricken banks, and for strengthening the guarantee scheme that protects depositors.
A banking union will not be effective without these other elements but they will be difficult to implement and may need time-consuming treaty changes.
"Anyone thinking this is going to be wrapped up by the end of the year is smoking something. It is going to be very complicated," said Graham Bishop, an EU policy consultant.
The ECB says there are 30 banks vital to the euro zone, and Bruegel, a leading EU think-tank whose analysis frequently guides policymaking, has identified roughly 200, accounting for 95 percent of euro zone banking assets, which it believes should be under the ECB's watchful eye.
EU officials expect day-to-day monitoring of smaller euro zone banks will be delegated to national watchdogs.
Berlin's reservations have the potential to delay the ECB getting supervisory power over lenders from 2013.
"It is not helpful that the biggest government is raising objections even before the Commission has made its proposal. If negotiations stall, that's a problem, particularly for Spain," BNP Paribas' Wattret said.
Eric Stein, a fund manager with Eaton Vance Investment Managers, a U.S. investor that buys European government debt, said watching the euro zone's attempts to tackle the crisis has been frustrating.
"Part of the problem in Europe is that all of the countries are fighting for their own national banking interests," he said.
"It's not just in the periphery but also the core. Germany doesn't seem to want the ECB to have control over the landesbanks. This is an impediment in getting a more integrated Europe."
International banks are apprehensive about the proposals.
"The industry will not want fragmentation of EU rules with one lot for the ins and one lot for the outs," said Andrew Gowers, spokesman for the Association for Financial Markets in Europe, which represents banks including Deutsche Bank and HSBC.
(Writing By John O'Donnell; Editing by Erica Billingham)
LONDON The Brexit squeeze on British consumers has hurt the government's finances as well as retailers, data showed on Tuesday, indicating that the economy's slowdown at the start of the year is now being felt more broadly.
HARIDWAR, India Narendra Modi leaned to whisper in the ear of the man sitting cross-legged and barefoot next to him, the one clad in saffron robes with a long beard and squinty gaze. It was late in the afternoon of March 23, 2014 in New Delhi and the start of national elections was a fortnight away.