NICOSIA, Sept 15 (Reuters) – Handing bank oversight to the
European Central Bank is not in itself sufficient to allow the
euro zone’s rescue fund to directly assist banks, Germany’s
Finance Minister said, warning he expected no such deal on
supervision in 2012.

Wolfgang Schaeuble made the comments after talks between EU
finance ministers on Saturday exposed deep divisions about a
proposed banking union. That may disappoint investors who had
been pinning hopes on a pledge by euro zone leaders to agree
sweeping new powers for the ECB in 2012.

NICOSIA, Sept 15 (Reuters) – German reticence over how fast
to centralise banking supervision in Europe stoked tensions with
France on Saturday, which urged prompt implementation of a plan
designed to tackle the financial crisis and help underpin the
single currency.

The reform, which needs to be approved by the European
Union’s 27 member states, aims to break the link between
struggling banks and indebted governments, an interdependence
that has exacerbated the region’s debt crisis.

NICOSIA (Reuters) – The International Monetary Fund and the European Commission backed Ireland’s calls on Friday to lighten the cost of its bank bailout, a move they hope will bolster the island’s borrowing prospects and help wean it off international support.

Debt-laden Ireland wants the terms tied to up to 31 billion euros of IOUs pumped into two failed banks eased, and for the euro zone’s rescue fund, the European Stability Mechanism, to take over Dublin’s stakes in other lenders.

BRUSSELS (Reuters) – The European Union will insist on higher reserves from banks and impose stricter oversight to protect taxpayers and savers from further bailouts caused by risk-taking, but will not break them up to separate investment banking from retail activities.

While there may be public backing for such a move, EU officials and banking experts said the splitting up of banks to lessen risks to the general public across the European Union would be too complex to achieve in the short term.

BRUSSELS/LONDON (Reuters) – 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.

BRUSSELS/LONDON, Aug 1 (Reuters) – The European Central
Bank’s watchdog for banks could get the power to order the
closure of lenders in what would be a radical step to tackle the
crisis, prompting concerns by policymakers that such
responsibility could backfire.

The plan remains subject to intense debate between the ECB,
the European Commission and member states, but officials and
policymakers who spoke to Reuters have outlined a framework of
how an ECB-sponsored uber-watchdog could work.

BRUSSELS (Reuters) – European policymakers are working on “last chance” options to bring Greece’s debts down and keep it in the euro zone, with the ECB and national central banks looking at taking significant losses on the value of their bond holdings, officials said.

Private creditors have already suffered big writedowns on their Greek bonds under a second bailout for Athens sealed in February, but this was not enough to put the country back on the path to solvency and a further restructuring is on the cards.

BRUSSELS (Reuters) – European policymakers are working on “last chance” options to bring Greece’s debts down and keep it in the euro zone, with the ECB and national central banks looking at taking significant losses on the value of their bond holdings, officials said.

Private creditors have already suffered big writedowns on their Greek bonds under a second bailout for Athens sealed in February, but this was not enough to put the country back on the path to solvency and a further restructuring is on the cards.

BRUSSELS (Reuters) – The European Commission warned on Wednesday that the EU could take over supervision of benchmarks such as Libor as one of its most senior officials unleashed a broadside at the Bank of England for its failure to stamp out rigging.

Manipulation of Libor, which is used to set prices for trillions of dollars of financial products around the globe, has landed Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) with a penalty of $453 million, claimed the scalp of its chief executive and threatens to drag in several other banks into the rate-fixing scandal.

FRANKFURT/BRUSSELS (Reuters) – The European Central Bank is putting pressure on the organizers of Euribor for an overhaul to shore up faith in the benchmark interest rate following a scandal over the manipulation of the Libor standard, sources familiar with the matter said.

The move chimes with Tuesday’s warning from U.S. Federal Reserve Chairman Ben Bernanke that the system for determining the London interbank offered rate (Libor) is structurally flawed.