All large banks in Eurozone come under control of European Central Bank in new 'European banking union'
David Cameron and other EU leaders will today approve banking union in Europe after Britain won concessions to protect the City of London.
EU finance ministers including George Osborne reached agreement after a marathon all-night 14-hour session in Brussels. The landmark deal, the first step towards "fiscal and economic union" in the eurozone, will make the European Central Bank (ECB) the supervisory body for about 200 of the biggest banks in the 17-member euro area and non-euro nations that decide to take part.
Although the UK will not join banking union, there are fears that London's premier position as a financial centre will be undermined by the 17 euro nations voting en bloc on the European Banking Authority (EBA), which sets banking rules throughout the EU.
But Mr Osborne won safeguards under which EBA decisions will need a majority among both the 17 euro "ins" and the 10 "outs" including Britain. There will also be a non-discrimination clause to stop the ECB undermining any country or currency to protect London.
Greg Clark, the Treasury minister responsible for the City, said today that the deal was "very good for Britain," adding that "we got all that we asked for" to ensure the UK could not be discriminated against. He said the agreement would allow eurozone members to secure confidence in the euro without being at the expense of the EU's single market in financial services.
Under the deal, banks with more than 30bn euros (£24bn) in assets will be placed under the ECB's oversight. It would be able to intervene with smaller lenders and borrowers at the first sign of trouble.
After talks ended shortly before dawn, German Finance Minister Wolfgang Schauble, said:"We have reached the main points to establish a European banking supervisor that should take on its work in 2014."
Jose Manuel Barroso, the European Commission President, praised the deal as "a crucial and very substantive step towards completion of the banking union".