Kalousek: Agreement on bank supervision by end-2012 is unrealistic

Luxembourg, Oct 9 (CTK) - Czech Finance Minister Miroslav Kalousek said Tuesday it is unrealistic that countries of the European Union could reach a functioning and high-quality agreement about the strengthening of the banking supervision by the end of this year.

The European Commission has repeatedly declared an ambition to approve the agreement still this year.

"Many of us, including me, are convinced that if it (the agreement) is to be of high quality and functioning, the deadline set for the end of 2012 is absolutely unrealistic," Kalousek said in Luxembourg after meeting the other finance ministers of EU countries.

The question of a future banking union was one of the key topics of the meeting of finance ministers in Luxembourg.

The strengthening of supervision is to be one of the main pillars of the banking union. Based on the EC's proposals, the measure is to give the European Central Bank new supervision powers over 6,000 banks in the euro zone, for example.

Among the other pillars are to be a joint guarantee system of deposits and a fund that would be used to resolve banks' problems. But the EC has not presented the proposals of these components of the banking union yet.

But some countries, including the Czech Republic, insist that all is discussed together.

"We insist that this is discussed concurrently," Kalousek said.

These steps are closely interconnected and all their possible consequences must be considered, according to Kalousek.

The question of balance in voting rights in the European Banking Authority (EBA), for example, is also of key importance for the Czech Republic, apart from concurrent discussions with the other parts of the banking union.

The most sensitive issue is probably the question of the domestic regulator in relation to regulators of parent companies, because the dominant part of the banking market in the Czech Republic is made up of subsidiaries of foreign parents.

"(The Czech Republic) therefore cannot afford a situation when the domestic regulator, which is the Czech National Bank in our case, would not have the final word," Kalousek said.

Kalousek also said Tuesday it would be short-sighted and populist to immediately reject a possible request from Brussels to provide further money to the EU budget for this year.

He said that the debate is "virtual" as the EC has not asked states to provide any additional money for the budget yet.

Speculations that the EU budget lacks up to EUR10bn have been appearing in the European press for some time already. The EC might soon come up with a request for the provision of further money that should be paid to programmes helping poorer regions and supporting science and student exchanges, for example.

IF the EC asks for EUR10bn, as weekly European Voice said recently, the Czech Republic would be asked to pay around EUR200m (Kc5bn).