BERLIN, Nov 22 (Reuters) - Talks on creating a pan-European bank supervisor under the umbrella of the European Central Bank have failed to make sufficient progress on key points, a German official said on Thursday, casting doubt on a year-end deadline.
The official, who requested anonymity, said Germany was ready to accept that the country's large regional 'Landesbanken' should fall under the new supervisor, but there were differences on other important elements which would make for tough negotiations in the coming weeks.
'There was a very intense exchange at the Ecofin a week ago. Thereafter, new proposals were put on the table,' the official said. 'I would like to say that on three central issues we have not made sufficient progress. Therefore we face some very intense talks going forward.'
The official said these three areas included: the number of banks that the ECB would supervise; governance, including the role of non-euro countries; and the legal framework for a European bank supervisor.
'The change that we are undertaking is in our view so fundamental that we have said from the very beginning that quality must come before speed,' the official said.
European finance ministers will discuss common banking supervision again at a meeting on Dec. 4. If they fail to reach an agreement then, the self-imposed goal of establishing a framework for the supervisor by year-end would be in doubt.
The official made clear that Germany wanted the ECB to focus on systemically relevant institutions, but said this would include big Landesbanken.
'From our point of view it's totally clear that the big Landesbanken, because of their size alone, should fall under ECB supervision,' the official said.
He also made clear that it was important to bind non-euro zone countries into the decision-making process, despite the fact that they are not represented on the ECB board.
'We need a strict separation between supervision and monetary policy, and an equal participation for non-euro zone countries as far as decisions on banking supervision go,' the official said.
(Reporting by Noah Barkin and Gernot Heller) Keywords: EU BANKS/SUPERVISION GERMANY
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