October 23, 2011Sarkozy, Merkel Say No Deal On Crisis, Discussion To Go On Until Wednesday
BRUSSELS (Dow Jones)--An agreement on how to recapitalize euro zone banks and on the best way to boost the firepower of the bloc's rescue fund eluded a European Union summit Sunday, the leaders of France and Germany said, with negotiations to find a comprehensive solution to the euro zone crisis due to continue until Wednesday.
President Nicolas Sarkozy of France and German Chancellor Angela Merkel told a joint press conference they were satisfied with the progress made but that negotiations will still be needed over the next three days.
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"There have been hours and hours of discussions [...] We haven't succeeded yet, but we have until Wednesday," Sarkozy said, pointing to the "considerable complexity" of the issues at stake.
Turning the European Financial Stability Fund into a bank, the option favored by France to leverage the vehicle and increase its size, was off the table Sunday, he said, because it wouldn't be agreed upon by all the European institutions involved, including the European Central Bank.
The recapitalization of the bloc's banks will be discussed at an EU summit Wednesday, which includes the 17 countries sharing the euro as well as the other 10 EU members.
At the least, European governments were expected to seal an agreement to set aside as much as EUR108 billion to boost the cash reserves of banks weakened by their exposure to sovereign debt, three officials familiar with the discussions told Dow Jones earlier in the day.
EU finance ministers had discussed the recapitalization plan during a marathon 10-hour session Saturday, with Swedish Finance Minister Anders Borg saying afterward that they had agreed on the foundations.
But among the issues that were preventing a wide agreement on the plan, Sarkozy cited "other partners, notably the private sector, with whom an agreement must be found on a voluntary basis."
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