May 16, 2012 - Finance ministers from across the European Union (EU) have finalised an agreement that will overhaul regulation in the region's banking industry.

Negotiations between the 27 policymakers yesterday (15 May) resulted in the unanimous approval of fresh rules that have been designed to prevent the need for another bailout should financiers run into more serious difficulties in the future.

Under the terms of these new laws - which will now be put before the European Parliament before coming into effect next month - lenders will be required to hold tier 1 capital of 4.5 per cent.

This represents a significant upturn on the current figure of two per cent and should ensure that companies are more protected against debt problems.

Following the talks, Michel Barnier, internal markets commissioner for the EU, said these changes should "strengthen the resilience of the banking sector in the EU while ensuring that banks continue to finance economic activity and growth".