Banking union, EADS on menu for Merkel-Hollande meet

The leaders of France and Germany will tackle differences over EU banking supervision and a proposed tie-up between EADS and BAE at a meeting on Saturday, a German government spokesman said.

However, no decisions should be expected on either issue following the meeting between Angela Merkel and Francois Hollande in the southwestern German city of Ludwigsburg, the spokesman told a regular government news briefing.

"The topic of EADS and BAE will certainly be addressed at the working lunch with President Hollande. There will of course be no decisions this Saturday and you should not go into the press conference expecting any," said the spokesman.

The same applied to the issue of EU banking supervision, added the spokesman, Steffen Seibert.

Governments have been cautious since the announcement last week that the British defence group BAE and European aerospace giant EADS are negotiating a merger.

Last Friday, the French presidency said Paris and Berlin were waiting for the merger project to be clarified before passing judgement and taking decisions.

The two groups have until October 10 to finalise the project or abandon it.

The French and German governments hold big stakes in EADS, while the British state has a golden share in BAE that allows it to veto deals that it perceives not to be in the public interest.

And Paris and Berlin have differing views on common banking supervision.

While France would like to hand the European Central Bank power to supervise all 6,000 eurozone banks in January, Germany would like it to tackle just big banks and is in little hurry, arguing that thoroughness trumps speed.

Merkel and Hollande are meeting to mark a watershed 1962 speech by former French president Charles de Gaulle to German youths.

They are expected to hold a joint news conference at approximately 3:00 pm (1300 GMT).

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