Germany's Merkel sees bank recapitalization plan at Oct. EU meeting

The European Union should provide a signal of its intentions on recapitalizing troubled banks when national leaders meet at a summit later this month, said German Chancellor Angela Merkel Friday. The question of whether and how to boost the amount of capital held by banks has dominated discussion of the EU economy in recent weeks as questions have grown about whether the banks can survive without the aid, reported German Press Agency dpa. Merkel boosted the mood earlier this week when she said that she would support a move, if necessary. But Friday she cautioned that any plan needs to be reviewed thoroughly and said that world leaders would want to be sure to follow the advice of economic experts on a matter that bears so directly on the health of the European economy. "All European countries have to do their homework regarding financial management," she said during a joint press conference with Dutch Prime Minister Mark Rutte. The basic plan is that banks must first find ways to raise money themselves. If that fails, they would have to turn to national governments for assistance. Failing that, then assistance from the European Financial Stability Facility would be appropriate. But those details still need to be worked out by the EU leaders when they meet in Brussels on October 17-18 for their regular quarterly European Council meeting. Merkel is also set to host French President Nicolas Sarkozy Sunday in a meeting where the two are expected to work out strategies for the summit.