The German Sparkassen public banking system is regarded as a major success, although it could be argued that the cultural and political mores of the Germans might not be easily replicated in this country.

A system of regional publicly owned banks with a focus on lending to the SME sector could play an important role in restoring faith in the banking system and supporting economic growth, according to a leading expert.

The European Commission will propose next month giving the European Central Bank supervision over all of the eurozone’s major banks, German business newspaper Handelsblatt said yesterday, citing Commission sources.