Merkel defends compromise deal on eurozone banks
Published: 29th Jun 2012 15:08:59
Germany's Chancellor Angela Merkel says she is satisfied with a deal to help finance debt-laden eurozone countries.
"I think we found a good compromise," she said after all-night talks which saw her come under heavy pressure from Italy and Spain.
A new supervisory body will enable the European Central Bank (ECB) to "keep a very close eye on the banks", she said.
Spain is awaiting a 100bn-euro (£80bn; $125bn) recapitalisation of its troubled banks by the eurozone.
Mrs Merkel said the deal on lending would provide sufficient safeguards for the taxpayers' money used by the EU bailout funds.
The eurozone's bailout fund (backed by taxpayers' money) will be taking a stake in failed banks - risk has been increased”
The EU's existing bailout fund - the European Financial Stability Facility - will provide aid under the current rules until the new permanent fund, the European Stability Mechanism (ESM), is ready to take over. The ESM is due to be launched next month.
The funds will not only be able to lend directly to banks. They will also be used to buy bonds of countries like Italy and Spain whose borrowing costs have soared - with the intention that those countries will not have to apply for a formal Greek-style bailout.
Eurozone leaders agreed to begin implementing the decisions by 9 July. However, it could take until the end of the year before the new money becomes available.
Germany, the biggest economic power in the eurozone, is reluctant to continue bailing out debt-laden countries. Its position is supported by the Netherlands, Austria and Finland.
Announcing the deal, EU Council President Herman Van Rompuy said it would break the "vicious circle" between banks and national governments.
The euro surged against other currencies while European stock markets also rose sharply.
During Friday afternoon trading, the main German and French market were up 3.5%, while in London the FTSE 100 rose 1.8%.
US markets also rose significantly on opening. The Dow Jones industrial average was up 1.5% in early trading.
The BBC's Andrew Walker, in Brussels, says the new loans will not be given "seniority" over private sector loans.
This means that if Spain were to default, those official lenders would not get preferential treatment. The move should make Spanish government debt a little more attractive to private investors, our correspondent says.
Late on Thursday, Spain and Italy withheld support for a growth package worth 120bn euros, demanding immediate EU measures to lower their borrowing costs.
The growth package, including a funding boost for the European Investment Bank, was later agreed.
The leaders also approved a roadmap for building a more integrated eurozone - what should eventually become a fiscal union. It includes controversial plans for "eurobonds" - mutualisation of eurozone debt.
Mrs Merkel has resisted the idea of pooling eurozone debt. On Friday she said "details about liability will have to be discussed by the finance ministers and those negotiations will be anything but easy".
The deal came about after new French President Francois Hollande appeared to throw his weight behind Italy and Spain.
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Harvard CitationBBC News, 2012. Merkel defends compromise deal on eurozone banks [Online] (Updated 29th Jun 2012)
Available at: http://www.ukwirednews.com/news/1437723/Merkel-defends-compromise-deal-on-eurozone-banks [Accessed 2nd Sep 2014]
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With the doors to its brand new £1million training centre officially open, one of the UK's leading apprentice training providers, Bristol based S&B Automotive Academy, is showcasing its world-class facilities by launching a series of foreign student exchanges for the first time in its 41-year history. To get a flavour of what life is like as an apprentice in the UK, the Academy hosted 16 apprentice engineers and bus drivers from the G9 Automotive College in Hamburg, Germany, as part of a Europe-wide vocational training initiative called the ‘Leonardo Programme’ with support from the European Social Fund. In a reciprocal arrangement, S&B will be sending nine apprentices to Germany during February 2012 so that they can get an appreciation of life in the automotive industry on the Continent. A further three German exchange groups are being planned for next year. Designed to assist the development of vocational skills and training across Europe, including work placements for trainees, the Leonardo Programme has a budget of €1.75bn, which is helping to encourage UK organisations to work with their counterparts abroad. In what is expected to be another challenging year for employers in the UK automotive sector, S&B’s Chief Executive, Jon Winter, claims that the exchange initiative will bring many benefits to the Academy and its apprentices: “In a world of global automotive brands, it’s important for our learners to understand the international context of the industry they have chosen to make their career. This new exchange programme will enable apprentices and Academy staff alike to achieve a better understanding of the challenges and opportunities within the automotive arena in Europe. With the Academy’s influence also extending to the USA and Asia, there’s every possibility that this initiative could move further afield in the future.” Continued Winter: “The need for skilled technicians across the world is on the increase and we actively encourage our apprentices to look at broader horizons during their training. Many of them have already learned the phrase ‘Vorsprung durch Gelehrtheit’, quite simply, ‘Advancement through learning.” In the 2010/11 academic year, S&B doubled the number of successful Apprenticeships over the previous year with some 350 apprentices graduating from the Academy. At the same time, achievement levels reached an all-time high with an overall success rate of 85%. For those learners on the Advanced Apprenticeship three-year programme, success rates were even higher, at over 98%. PHOTO CAPTION: As part of their exchange visit, S&B Automotive Academy arranged for the German apprentices to visit Hampshire bus operator, Bluestar, at its Barton Park depot. The students are pictured with S&B’s Andy West (3rd right) and Steve Prewett, Bluestar’s Area Engineering Manager (2nd right). Ends http://www.sandbaa.com