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Merkel and Sarkozy agree to bolster Europe's banks

The Local · 9 Oct 2011, 20:38

Published: 09 Oct 2011 09:50 GMT+02:00
Updated: 09 Oct 2011 20:38 GMT+02:00

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Speaking at a joint news conference with French President Nicolas Sarkozy in the German capital, Merkel said Germany and France had "decided to do what is necessary to recapitalise (the) banks in order to assure the granting of credit to the economy."

Without announcing concrete details, Sarkozy said that Europe must "have resolved its problems" by the time G20 leaders meet in the French Riviera resort of Cannes at the beginning of November.

As Europe's debt crisis simmers and Greece teeters on the brink of bankruptcy, Sarkozy vowed a "global, lasting and quick response" to the crisis before the end of the month, adding this had been the "main result of this Franco-German meeting."

Sarkozy added that "agreement was complete," following reports that Europe's two biggest economies were at odds over how to proceed on shoring up banks overexposed to risky sovereign debt.

"An economy is not prosperous without stable and reliable banks," he said.

Sarkozy also said that Paris and Berlin would propose "important changes" to European treaties, adding he favoured greater integration of the eurozone.

For her part, Merkel said the "goal is to have closer and more binding cooperation of eurozone countries" to avoid overspending.

Leaders want to prevent any new, bigger reduction of Greece's debt triggering a banking crisis reminiscent of 2008 which set off a global recession.

In July, leaders agreed a 21-percent "haircut", or reduction in the value of the debt banks hold, in exchange for lowering Athens' debilitating repayments in the next few years.

Berlin and Paris reportedly differed over how to go about recapitalising Europe's banks, which the IMF thinks will need between €100 billion and €200 billion ($135 billion and $270 billion) to cover potential losses.

Story continues below…

Germany, Europe's strongest economy and effective eurozone paymaster, wants under-pressure banks to first turn to investors for funds before appealing for national or European cash.

France, fearful of losing its top-notch AAA credit rating, would rather dip into European funds than its own coffers.

AFP/The Local/mry

The Local (news@thelocal.de)

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Your comments about this article

10:36 October 9, 2011 by William Thirteen
the chickens are coming home to roost...
12:55 October 9, 2011 by storymann
Mrs Merkel is telling Sarkosy, I will roll the dice first.
14:39 October 9, 2011 by wenddiver
Government for and by the Investment Banker.

Politicians have not been so clueless about the danger of this, since Louis the 16th of France.
15:21 October 9, 2011 by derExDeutsche
haha. I remember when Americans got angry at the Banks being bailed out ... 'tea-baggers' was all the major networks called it.

I saw this on Rasmussen today;

'Yet while many activists try to link the Republican Party and Wall Street, Republicans think the bank bailouts were a bad idea by an eight-to-one margin. Those not affiliated with either major party think they were a bad idea by a four-to-one margin. Democrats are much more evenly divided. '

19:12 October 9, 2011 by Englishted
I simply don't trust the pair of them.
19:53 October 9, 2011 by Bushdiver
I've never seen two countries so willing to throw more good money after bad. Will either country start thinking logically?
23:35 October 9, 2011 by wenddiver
"Merkel and Sarkozy agree to bolster Europe's banks", in America we would say, "Merkel agrees German taxpayer should bolster French Banks"

Very Orwellian.
02:22 October 10, 2011 by derExDeutsche
talk about very Orwellian ...

07:26 October 10, 2011 by mos101392
Oh no-Here we go again. In the states, the banks got bailouts, the CEOs still got their multimillion salary but they made it even harder for businesses to get loans and found new charges for the customer. Bank of America got billions in bailout money, the CEO got his millions. and now this month this customers have to pay a $5.00 a month service charge on their debit cards. Also, only certain banks got bailout money and others were chosen to fail. Isn't life wonderful?
10:48 October 10, 2011 by storymann
The summit this past Sunday appears to have accomplished little.Neither is saying anything about a joint plan, both have said they will not divulge any information concerning their plan until mid to late November. That is most likely because they do not have one. This is only a teaser for the market.
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