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EU leaders delay summit meeting to agree crisis plan

10-11-2011 08:34 BJT Special Report: Chinese President Hu Jintao Visits Autria, Attend G20 Summit |

BRUSSELS (Reuters) - European Union leaders will delay a summit meeting planned for next Monday by almost a week, buying time to agree a crisis strategy to boost struggling banks and cope with Greece's heavy debts.

European Council President Herman Van Rompuy announced a postponement until October 23 after German Chancellor Angela Merkel and French President Nicolas Sarkozy promised on Sunday to present measures to stabilize the euro zone by the end of the month.

They gave scant details about their plan, other than to signal that it would include bank recapitalization, something which has divided German and France.

Germany, which could easily bankroll its weak lenders, wants countries to stand by their own banks.

But France, whose banks are heavily exposed to Greek debt and grappling with an interbank lending freeze, fears it could lose its high credit rating by bailing them out.

Rather than a politically embarrassing taxpayer bailout, France would prefer to shunt the bill onto the euro zone rescue fund, the European Financial Stability Facility (EFSF), which will soon be able to lend money to governments to help banks. Germany insists this should be used only as a very last resort.

Van Rompuy is trying to broker a compromise on that and other issues, as well as getting other countries in Europe, including Spain and Italy, on board.

But many experts are skeptical that he will win backing for what they see as a badly needed increase in the size of the EFSF.

"If they still have only 440 billion euros, you are quickly going to burn through that by recapitalizing banks, with not enough left for sovereigns," said one banker.

Editor:James |Source: CNTV

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