Reuters: Regulatory News: UPDATE 1-Czech PM against EU integration plans ahead of summit

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UPDATE 1-Czech PM against EU integration plans ahead of summit Jun 27th 2012, 10:06 Wed Jun 27, 2012 6:06am EDT * Czechs protect richly-capitalised banking sector * Out of euro and fiscal pact, Czechs far from EU core * Against any plans to move bank regulation to EU level PRAGUE, June 27 (Reuters) - The Czech government will not accept proposals for deeper European banking and fiscal integration circulated ahead of an EU summit this week, Prime Minister Petr Necas said on Wednesday. European Council President Herman Van Rompuy has released a seven-page report envisaging a euro zone treasury that would issue common debt in the medium term, as well as elevating banking regulation to the European level. Such structures are seen by many as the minimum necessary to finally bring the euro zone debt crisis under control, but they are facing resistance in a number of European capaitals. "The (government's) mandate orders me not to accept the proposals that have been in circulated in the media so far," Necas told a news conference ahead of the EU summit on Thursday. "Some proposals like the banking union could have extremely damaging impact on the Czech economy." The Czechs have not joined the euro and the EU's fiscal pact and the main political parties have been in conflict on how to approach further EU integration. Necas said he did not expect any major conclusions from the summit. German Chancellor Angela Merkel has rejected the idea of issuing common debt, which would help weaker countries but put a greater burden on Germany. The Czech banking sector is controlled by foreign banks like Erste Bank, KBC, Societe Generale and Unicredit, and their local subsidiaries have high capital buffers. No Czech banks required bailouts in the financial crisis and they have very low holdings of risky assets. This has led to fears that unified bank regulation would remove the ability of Czech regulators to oversee and limit capital and asset flows between Czech banks and their foreign parent institutions. Link this Share this Digg this Email Reprints

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