EU leaders are heading to a summit in Brussels, hours after a long-awaited pact was agreed on how to respond to failing eurozone banks.

Under the plan a 55bn euro ($75bn; £46bn) fund would be set up, financed by the banking industry, over 10 years.

A new European resolution authority would be created, which would decide when and how banks would be closed.

The deal is part of wider efforts towards building a banking union to avoid taxpayer-funded bank bailouts.

Spain's Economy Minister Luis de Guindos with ECB President Mario Draghi in Brussels

On paper, the agreement represents the biggest centralisation of power in the European Union since the launch of the euro, BBC Europe correspondent Chris Morris reports.

The UK and other 10 non-eurozone economies are not part of the deal.

Under the complex deal, a resolution fund paid for by the banks themselves would gradually merge national pots into a common European fund over the course of the next decade as a new European agency, the resolution authority, is set up.

The agreement, hammered out after months of negotiation, will be considered for approval by EU when they meet later on Thursday. They have been keen to finalise a deal before new bank "stress tests" begin next year.

(Source: BBC)