German Chancellor Angela Merkel, left. arrives for an EU summit in Brussels on Sunday, Oct. 23, 2011. Big banks find themselves under pressure in Europe's debt crisis with finance chiefs pushing to raise billions of euros in capital and accept huge losses on Greek bonds they hold. (AP Photo/Geert Vanden Wijngaert)
German Chancellor Angela Merkel, left. arrives for an EU summit in Brussels on Sunday, Oct. 23, 2011. Big banks find themselves under pressure in Europe's debt crisis with finance chiefs pushing to raise billions of euros in capital and accept huge losses on Greek bonds they hold. (AP Photo/Geert Vanden Wijngaert)
German Chancellor Angela Merkel arrives for an EU summit in Brussels on Sunday, Oct. 23, 2011. Big banks find themselves under pressure in Europe's debt crisis with finance chiefs pushing to raise billions of euros in capital and accept huge losses on Greek bonds they hold. (AP Photo/Geert Vanden Wijngaert)
Greek Prime Minister George Papandreou, left, speaks with Latvian Prime Minister Valdis Dombrovskis during a round table meeting at an EU summit in Brussels on Sunday, Oct. 23, 2011. Greece's prime minister is pleading with European leaders in Brussels to act decisively to solve the continent's debt crisis. At a summit Sunday, the leaders are expected to ask banks to accept huge losses on Greek bonds to ease the pressure on the country, and to raise billions more in capital to weather those losses. (AP Photo/Yves Logghe)
Greek Prime Minister George Papandreou, left, speaks with Luxembourg's Prime Minister Jean-Claude Juncker during a round table meeting at an EU summit in Brussels on Sunday, Oct. 23, 2011. Greece's prime minister is pleading with European leaders in Brussels to act decisively to solve the continent's debt crisis. At a summit Sunday, the leaders are expected to ask banks to accept huge losses on Greek bonds to ease the pressure on the country, and to raise billions more in capital to weather those losses. (AP Photo/Yves Logghe)
German Chancellor Angela Merkel, left, speaks with Dutch Prime Minister Mark Rutte during a round table meeting at an EU summit in Brussels on Sunday, Oct. 23, 2011. Greece's prime minister is pleading with European leaders in Brussels to act decisively to solve the continent's debt crisis. At a summit Sunday, the leaders are expected to ask banks to accept huge losses on Greek bonds to ease the pressure on the country, and to raise billions more in capital to weather those losses. (AP Photo/Yves Logghe)
BRUSSELS (AP) ? The European Union will require banks to raise their capital buffers to higher levels by 2012, much earlier than required, France's president said Sunday, signaling one element of a broader plan to finally get a grip on Europe's escalating debt crisis.
Nicolas Sarkozy, who was speaking after a summit of the 27 EU leaders in Brussels, said the capital buffers that banks have to achieve under the Basel III rules by 2019 will already be obligatory for big EU banks as of next year.
He did not say how much money banks will have to raise as a result of the anticipation of the rules, but a European official said Saturday that they would force banks to find just over euro100 billion ($140 billion) ? either through issuing new shares, selling off assets or asking their governments for help.
EU leaders were reluctant to unveil details of the new bank rules until they have other parts of their rescue plan in place, especially a decision on how to boost the firepower of their bailout fund.
They also have to find a solution for Greece's massive debt problem. Negotiations with banks to take losses on their bond holdings were only advancing slowly, but leaders have promised a full-fledged plan in time for a second summit on Wednesday. A report from Greece's debt inspectors has suggested that the value of the bonds may need to be reduced as much as 60 percent.
"It is a comprehensive package and the recapitalization of the banks, getting a lasting solution to the Greek debt, and what we call the leveraging of the European Financial Stability Facility are the three main parts of that package," said EU President Herman Van Rompuy, who chaired the discussions of the 27 EU leaders. "We are confident that we will get an agreement on Wednesday. Otherwise we would not take a decision on recapitalization of the banks on Wednesday."
Weaker countries such as Italy and Spain did not want to fully approve the requirement for banks to shore up their rainy-day funds unless they know for sure that they can get help from the European Financial Stability Facility, if necessary.
But Europe is quickly running out of time, with turmoil on financial markets worsening since the summer. The longer leaders put off important decisions, the less trust investors and even citizens have in their ability to achieve results.
"Greece has proven again and again that we are making the necessary decisions to make our economy sustainable, and make our economy more just," said Greek Prime Minister George Papandreou, whose country has undergone more than a year of painful austerity after being frozen out of bond markets. "The crisis is a European crisis, so now is the time that we as Europeans need to act decisively and effectively."
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