Greek deal paves way for upbeat EU summit

EU leaders meet Thursday for the final summit of a difficult year, having cleared a crucial bailout for Greece to tame the debt crisis and thrashed out a bank supervision deal. In a long night, their finance ministers agreed a complex bank supervision deal, a key step towards a banking union which EU leaders hope will ring-fence banks in trouble to prevent future crises. The 17 eurozone finance ministers meanwhile agreed to release long-delayed bailout funds needed for Greece to avert default after reviewing a debt buy-back exercise designed to lighten the burden. The money for Athens "will be flowing to Greece as early as next week," the head of the Eurogroup, Jean-Claude Juncker, said, with a first payment totalling 34.3 billion euros. The funds will go to help recapitalise Greece's banks and cover the costs of the debt buy-back, with some left over for the state budget, while another 14.8 billion euros will be available in the first quarter. "Together with Greece we are prepared to take additional measures if necessary ... (so as) to put Greece on a path to debt sustainability," Juncker said. Juncker said eurozone finance ministers also reviewed Cyprus' situation, noting progress made but with any bailout decision waiting at least to January. On the agenda for the leaders summit is an ambitious blueprint to improve the workings of the EU through increased economic and political integration, leading ultimately to greater powers for its institutions at the expense of national governments. For European Council President Herman Van Rompuy, the key words are "deeper integration and reinforced solidarity" in a programme to take the EU towards completion of its Economic and Monetary Union. Such proposals belong in the "impossibly distant future" for some member states but the issues involved cannot be dismissed since they go to the heart of the EU's future and Van Rompuy has pressed for full consideration of them. With Greece settled, EU leaders can go into their summit claiming to have made real progress in resolving a debt crisis which has brought the economy to its knees after three gruelling years. "It cannot be valued highly enough that eurozone finance ministers agreed overnight on a legal framework and the outlines of a common supervisory mechanism for banks," German Chancellor Angela Merkel said. The new Single Supervisory Mechanism (SSM) for the eurozone agreed in the early hours Thursday will come under the European Central Bank which will coordinate oversight with national authorities. The ECB will also work in tandem with the London-based European Banking Authority, which covers all 27 EU states. The "overall aim is to restore confidence in the banking sector," said the meeting's chair, Cyprus Finance Minister Vassos Shiarly, describing the accord as a "Christmas present for the whole of Europe." From March 2014, banks with assets of more than 30 billion euros or equal to 20 percent of a state's economic output will come under the ECB remit. The ECB will also have the right to intervene in cases involving smaller banks but it is expected that national supervisors will have the main responsibility in this category. The initial SSM accord will be followed next year by proposals for a winding up facility for banks that cannot be fixed and a deposit guarantee system. The ECB will directly supervise some 200 of the biggest of the estimated 6,000 eurozone lenders under the scheme. Britain, which with Sweden will not be joining the new system, wanted changes to voting rights so as to protect its position in the EBA and the interests of the City of London global financial centre. London had feared that the ECB's new role would undercut that of the EBA but British Chancellor of the Exchequer George Osborne said the accord was "a good outcome for the entire European Union ... The countries that weren't going to join the banking union, like Britain, were protected." The SSM will ultimately allow the European Stability Mechanism (ESM), the eurozone's new defence fund, to recapitalise struggling banks directly, bypassing governments so as to not add to their debt burden. "How many people would have believed at this time last year (that) we would have agreed ... We have put in place an essential bloc of the banking union," EU Economics Commissioner Olli Rehn said after the eurozone finance ministers meeting.