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EU leaders to discuss bank crisis EU leaders to discuss bank crisis
(1 day later)
A European financial summit to discuss the current global crisis is set to take place in Paris on Saturday. A number of European leaders are due to discuss the global economic crisis at an emergency summit in Paris later.
Leaders from Britain, Germany and Italy, together with the president of the European Commission and European Central Bank chief, will be attending. UK Prime Minister Gordon Brown and the leaders of France, Germany and Italy are all due to attend.
President Nicolas Sarkozy hopes it will lead to a world summit later this year. They are expected to meet the president of the European Commission and European Central Bank chief.
Rumours of a 300bn euros (£237bn, $417bn) EU-wide rescue similar to the plan being discussed by the US Congress have been denied by Sarkozy's office. The meeting was set up to try to forge a common approach but there have already been considerable disagreements about any sort of EU bail-out package.
Calls for European action follow the bail-out of both Bradford and Bingley, which cost the UK government around £14bn, and Fortis Bank, which cost the governments of Belgium, Luxembourg and the Netherlands around £9bn. French President Nicolas Sarkozy has said he hopes the discussions will lead to a world summit later this year.
Disadvantage Co-ordinated response
But there are growing divisions in Europe about where the limits are when it comes to regulating the money markets and bailing out failing banks and financial houses.
The scheduled four-hour meeting on Saturday will welcome Washington's approval of a $700bn (£397bn) rescue package planned to restore confidence in Wall Street.
European leaders are keen to agree a co-ordinated response ahead of next week's meeting of the G8 finance ministers and central bank governors in Washington.European leaders are keen to agree a co-ordinated response ahead of next week's meeting of the G8 finance ministers and central bank governors in Washington.
Meanwhile, the Irish government's unilateral move to safeguard all deposits, bonds and debts in the Republic of Ireland's biggest banks and building societies for the next two years has raised concerns about competitive disadvantage among UK banks. But plans for a 300bn euros (£237bn, $417bn) EU-wide rescue similar to the US Congress plan have been denied by Mr Sarkozy's office.
However, according to Karel Lannoo from Brussels think tank the Centre for European Policy Studies, it is a mistake to allow individual European countries to deal with their own banks. Calls for European action follow the bail-out of both Bradford and Bingley, which cost the UK government around £14bn, and Fortis Bank, which cost the governments of Belgium, Luxembourg and the Netherlands around £9bn.
"Most of these banks, certainly the 50 largest European banks have outgrown their national boundaries," he said. Only the Dutch appear to support getting the European Union's 27 countries to contribute to a £250bn emergency fund.
"They are no longer a Belgian or a French or a German bank - they have in many cases the majority of their employees outside their home country." Such a fund would be used only when one of the member states' key banks or financial institutions faced serious trouble.
'Nation-by-nation' Scepticism
However, the BBC's Emma Jane Kirby in Paris said there is little agreement on how the Paris talks should proceed. The four leaders, however, are expected to look at how they can encourage confidence by strengthening co-operation within Europe and ensuring the financial markets function properly in the future.
Germany has made its opposition to any coordinated European bail-out plan known ahead of the meeting, while the chairman of eurozone finance ministers has also rejected any need for a European rescue fund for distressed banks. The BBC's Alistair Sandford said: "France wants countries to agree to intervene where necessary to protect European banks.
Eurogroup chairman Jean-Claude Juncker said Europe did not need a similar programme to the US's $700bn (£396bn) plan to take so-called toxic assets off banks' balance sheets. "But after the recent divisions, it is far from clear what will emerge."
British Prime Minister Gordon Brown is also sceptical of the need for any Europe-wide plan. Germany has made its opposition to any co-ordinated European bail-out plan known ahead of the meeting.
According to the BBC's Europe correspondent, Mark Mardell: "Downing Street prefers the case-by-case, nation-by-nation solutions that have been happening so far." Gordon Brown is also sceptical of the need for any Europe-wide plan.
However, a French civil servant is reported to have proposed a 300bn euro bail-out fund, and the Netherlands has proposed the creation of a European reserve fund to come to the aid of ailing banks before they fail. BBC Europe correspondent Mark Mardell said Downing Street prefered the case-by-case, nation-by-nation solutions that have been happening so far.
Despite the differing views, Gordon Brown's spokesman said he did not expect discussion of an EU-wide bank fund at the meeting. The president of the European Parliament, Hans-Gert Pöttering, has criticised the summit, warning that it has no power to make decisions for the entire EU.
"The purpose of the meeting will be to discuss how each of the four major economies in Europe are responding to the global financial crisis," he said.