EU agrees on bank supervisor

European Union leaders agreed on Friday a single supervisor will take responsibility for overseeing euro zone banks from next year. Details on the precise number of banks to be monitored and the powers the supervisor - the European Central Bank - will have, however, were left for later.

European Union leaders agreed on Friday a single supervisor will take responsibility for overseeing euro zone banks from next year.

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Details on the precise number of banks to be monitored and the powers the supervisor - the European Central Bank - will have, however, were left for later.

The decision opens the way for the euro zone's rescue fund to inject capital directly into ailing banks during the course of 2013 but whether that will allow Spain to transfer some of its banking liabilities off the government's books will also not be determined until later in the year.

"There was an agreement, a good agreement on timing and about the banks as whole," French president Francois Hollande told reporters.

European Council President Herman Van Rompuy said the 27 leaders agreed to adopt a legal framework by the end of this year giving the ECB overall responsibility for banking supervision with national regulators consulted. "Once this is agreed the single supervisory mechanism could probably be effectively operational in the course of 2013," he told a 4 am news conference.

French and EU officials said all 6 000 banks in the single currency area would gradually come under ECB supervision by 2014 starting with banks receiving state aid then large cross-border institutions even though a statement from EU leaders did not specify a number or the specifics of a timeline.