The conclusions of the informal meeting "underline the importance of dealing with impaired banking assets […] in line with the guidelines provided by the Commission and in full respect of competition rules". On 25 February, the EU executive called for a coordinated but ultimately flexible approach at national level to dealing with such assets, which are at the origin of the current turmoil and include mortgage-backed securities (EurActiv 26/02/09).
European banks' level of exposure to these poisonous financial products remains unclear. "We have no certainty about the amount of toxic assets held by European banks," Italian Prime Minister Silvio Berlusconi told reporters at the end of the meeting.
"Some central banks reckon they amount to three times the resources of the EU banking system, although not all toxic assets are without a value," he said.
Bad bank or not bad bank?
EU leaders also decided to allow member states to establish so-called "bad banks" to absorb toxic assets and allow the banking system to recover more quickly. Nevertheless, some governments have already ruled out this option.
French President Nicolas Sarkozy is opposed to applying this idea in France, because "bad banks mean the nationalisation of losses," he told reporters at the end of the informal summit.
Berlusconi expressed similar views, saying there is no need for bad banks in Italy owing to the fact that "Italian banks are not familiar with speaking English", in reference to the allegedly Anglo-Saxon-born financial crisis.
Deal on financial supervision 'by June'
The conclusions of the meeting took into account the De Larosiére report on financial supervision, which proposed "realistic" rather than ambitious reform of financial supervision in Europe (EurActiv 26/02/09)
On this issue, "first decisions must be taken by June after a thorough discussion in the Ecofin Council," underlines the final text. But critics are complaining that postponing a European deal on financial supervision to June, instead of March as originally foreseen, will have a negative impact on the EU's ability to shape discussions on the global financial architecture at the G20 summit, scheduled to take place in London on 2 April and thus likely to occur before EU leaders have reached a common position.
