By GEOFFREY T. SMITH and MATINA STEVIS

BRUSSELS—European Union officials provided few details Friday about how they plan to put into practice decisions reached overnight at a 14-hour meeting to centralize banking regulation and allow the bloc's rescue funds to directly recapitalize banks.
"The details about liability...still have to be negotiated individually, and I can predict now that they will be quite difficult negotiations because we are in a new area, and for that reason it won't just take only 10 days," Ms. Merkel told a press conference Friday after two days of talks with EU leaders.


European Pressphoto AgencyGerman Chancellor Angela Merkel speaks during a news conference at the end of the European Union summit in Brussels on Friday.

European Commission President José Manuel Barroso said the decisions would have been "unthinkable" some months ago, before doubts rose about the future of the euro. He said the commission—the EU's executive arm—would flesh out plans to create a bank supervisor under the European Central Bank over the summer in a bid to complete them by the end of the year.
That timetable was very ambitious, he said at a news conference following the summit of the 27-nation EU.
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European Council President Herman Van Rompuy said centralized oversight of the banking industry was necessary to allow the bailout funds—the European Financial Stability Facility and the European Stability Mechanism—to help ailing banks without burdening governments already struggling to pay their debts.
And in a move aimed at calming anxious bond markets, they also decided in principle that any loans extended to Spain to recapitalize its banks shouldn't be senior to existing government debt.
Despite the appearance of making major concessions, Ms. Merkel was at pains to stress how little she had given away. She assured her audience that the German parliament, or Bundestag, will have the right to vote on all future instances where the European Stability Mechanism's funds are used to recapitalize banks.
And she reiterated that the German law that implements the treaty governing the ESM on national soil also allows the Bundestag a vote on any changes to the modalities of its operations.
Ms. Merkel welcomed the decision to involve the European Central Bank in supervising euro-zone banks.
"My trust in the ECB is great," Ms. Merkel said. "Firstly because the ECB is an independent body anyway, and second because it's in its own self-interest to have sound banks."
Messrs. Van Rompuy and Barroso offered no concessions to countries such as Spain and Italy, which want the rescue funds to help them hold down borrowing costs by buying their bonds.
Instead, Mr. Van Rompuy said tapping the two funds would come with strings attached.
"There's nothing for free and conditionality is absolutely key when we speak about support," Mr. Van Rompuy said.
On Spain, which has requested a bailout for its banks, Mr. Van Rompuy said the aid would be provided "as soon as possible."
Write to Geoffrey T. Smith at [email protected] and Matina Stevis at [email protected]