'Eurozone' summit reaches bank rescue plan

PARIS, Oct. 12 (UPI) -- The 15 countries of the Eurozone agreed Sunday on an emergency deal to guarantee financial debt for five years and to take a direct stake in banks if needed.

Representatives of Eurozone countries, meeting in Paris, also agreed to shore up interbank markets to jump-start lending, even though the plan falls short of calls for a European Union-wide rescue fund to prop up banks after a seizure of credit markets last week, The Daily Telegraph reported.

French President Nicolas Sarkozy said Germany, France and Italy all would present national plans to help markets Monday.

"None of our countries acting alone can end this crisis. We're not giving any presents to the banks, we're allowing them to function," he said.

International Monetary Fund data indicate European banks have used leverage more aggressively than U.S. banks to boost profits, the British newspaper said.

"They are terribly over-leveraged," said Matt King, credit strategist at Citigroup. "They are going to have to raise $400 billion in fresh capital, four times as much as they have done so far. Unlike the Americans, they still haven't come to terms with their structural problems."