Barroso calls for EU banking union

(LONDON) - European banks should be supervised by a cross-border authority providing bloc-wide deposit cover and a rescue pot funded by taxes on financial institutions, EU Commission chief Jose Manuel Barroso said Tuesday.

The president of the European Union's executive arm told Tuesday's Financial Times newspaper that the ambitious plan could be realised by next year without the need for existing treaties to be changed.

"There is now a much clearer awareness among European member states about the need to go further in terms of integration, especially in the euro area. This is one lesson of the crisis," he told the business daily.

Investors' euphoria over a huge eurozone rescue loan for Spain's banks lasted just hours on Monday as they fretted over the details and weighed the possibility of a stormy Greek exit from the 17-nation eurozone.

Spain's eurozone partners agreed Saturday to extend up to 100 billion euros ($125 billion) to salvage a banking sector weakened by reckless lending to a property market that crashed in 2008.

After an initial warm welcome by the markets, the atmosphere turned nasty for both Spain and Italy on the fear that Sunday's elections in Greece could lead to Athens quitting the euro, with unknown consequences.