EU made another step closer to banking union, CR will receive a guarantee

European Union financial ministers struck an agreement early Thursday to move the bloc closer to banking union by bringing the region's largest lenders under a single supervisory authorities, reports from the region said. Under the deal announced after midnight, the European Central Bank will be given oversight over all banks with either more than 30 billion euros in assets or which have a large presence within a member economy, the Associated Press reported.

The CR backed away from its threat of a veto of EU banking union after a compromise was proposed by the Cyprus EU presidency. Under the compromise, the CR will receive a guarantee that the national banking regulator will have a significant voice in any conversions of foreignowned subsidiaries to branches. More than 90 % of the Czech banking sector is in the hands of subsidiaries of foreign banks seated in the euro zone. Ex-CNB Gov. Zdenek Tuma (now KPMG) said he does not think the common bank supervision aspect of EU banking union poses a significant risk. It will not have a direct impact on the CR, he said. We do not expect any particular impact on Czech banks todays trading except for overall sentiment.