European governments should avoid taking action that could have an "undesirable impact" on rival banks in other countries, the 'Big Four' stressed in a joint statement, adding that the frantic case-by-case approach pursued so far was not helping to restore confidence in the increasingly agitated banking sector.
The plea can be seen as a swipe at Ireland, which had earlier unilaterally offered to fully guarantee all bank debts, a move described by EU Competition Commissioner Neelie Kroes as "discriminatory".
Germany follows Ireland
But while the four leaders pledged to "work cooperatively and in a coordinated way within the European Union," the statement appeared to carry little weight, with Germany announcing the very next day that it intended to follow Ireland's example.
On Sunday, the German government announced it will fully cover more than €500 billion in private deposit accounts. "Finance Minister Peer Steinbrueck said today that people in Germany will not lose a single euro of their savings because of this crisis, and that statement applies as of today," said his chief spokesman, Torsten Albig.
The government also announced a €50 billion rescue plan for the teetering Hypo Real Estate bank, while Belgium and Luxembourg announced they had found a buyer for troubled financial group Fortis in BNP Paribas.
The idea is to prevent any major European financial institution from going bankrupt. But the four European leaders are reluctant to commit to any EU-wide bail-out plan on the scale of that approved in the US.
Stability pact and EU state aid rules to be interpreted more flexibly
Instead, they called on their counterparts to agree upon EU laws outlawing state subsidies for private companies, to be "applied in a flexible manner". They also called for new EU-wide rules on bank deposit guarantees, closer supervision of bankers' pay, further cooperation between regulators and a review of EU accounting rules, which are accused of deepening the crisis by encouraging stock-market speculation against banks.
The four heads of government also concluded that the European economy was facing "exceptional circumstances" and asked for the application of the stability and growth pact - the eurozone rules requiring that national budget deficits be limited to 3% of their GDP - to "reflect" this situation.
For the French government, this could represent a silver lining amid the crisis. Even before the financial meltdown, France had been struggling to meet a commitment to balance its budget by 2012 (EurActiv 12/02/08).
The conclusions of the Paris mini-summit will now be examined by finance ministers from all 27 EU governments at their meeting in Luxembourg tomorrow (7 October), then at a summit of leaders in Brussels next week.
