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UK wins concessions on EU bank reform

(Xinhua)
Updated: 2009-06-20 09:22

BRUSSELS -- Britain's embattled prime minister looked surprisingly chipper at the EU summit.

Gordon Brown was no doubt buoyed by the news that Conservative opposition leader David Cameron was enduring some discomfort back in London over expense account revelations. In addition, Brown was able to cast himself as the plucky defender of British interests against European interference, a role that might earn him some rare positive press at home.

Even better, the battlefield on which he'd decided to take on his EU partners was one where Brown feels comfortable -- international banking regulations -- and he was pretty sure of coming away from Brussels with a measure of success.

European Commission President Jose Manuel Barroso (L) talks to Estonia's Prime Minister Andrus Ansip and Britain's Prime Minister Gordon Brown (R) during a two-day European Union leaders summit in Brussels June 19, 2009. [Agencies]

In a deal struck in the small hours of Friday morning, the EU leaders agreed on the need for pan-European supervision of the banking sector in the wake of last year's financial meltdown, but they bowed to Brown's insistence that the new cross-border watchdogs won't be able to tell national authorities when and how they have to use taxpayers' money to shore up failing banks.

Related readings:  EU summit plans to overhaul financial supervision  EU, Britons and the role of skepticism  Crisis shifts sands of EU political divisions  EU commission chief stands for second mandate  EU vows economic leadership after assembly vote

"Decisions taken by the European Supervisory Authorities should not impinge in any way on the fiscal responsibilities of member states," said the draft declaration due to be adopted by the 27 leaders.

The new supervisory framework was also called for at the London G-20 summit in April, where world leader decided to keep a closer eye on the banking sector, which left to their own devices managed to build up mountains of bad debt last year precipitating the global economic downturn.

EU leaders agreed to set up a European Systemic Risk Board to monitor potential threats to financial stability and issue warnings and recommendations for government action.

In a second step, the summit called for the creation of a European System of Financial Supervisors to oversee national supervision, set up a single set of rules for financial institutions working within the 27-nation bloc and boost oversight of cross-border banks.

The latter issue was the one which caused problems for Britain. Brown was concerned that could lead to undue EU interference in the City of London, Europe's biggest banking center, and in particular force the government to intervene to support troubled European subsidiaries of British banks.

"It is only logical that where a supervisory decision will have an impact on the taxpayer, that decision should be for the relevant national authorities," Brown insisted as he went into the summit on Thursday.

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