(Updates with quotes, details)
VALLETTA, Malta, Oct 5 (Reuters) - France and Italy led acall by five euro zone member states for the European Union topress ahead toward setting up a single banking regulator by theend of the year to be running in 2013.
The leaders of France, Malta, Spain, Italy, and Portugal metin Malta on Friday at a summit with North African countries aspart of the 5+5 group of Mediterranean countries.
The leaders in a joint statement said the next EuropeanCouncil on Oct. 18-19 "must pave the way towards theestablishment of a single European banking supervision system,to be decided before the end of the year and operational byJanuary 2013".
European leaders have agreed in principle to work for thecreation of a single banking union in which member states wouldjointly back their banks as a means of shoring up the Europeanfinancial system.
But Germany, the bloc's biggest economy, has expresseddoubts about whether it will be possible to get a joint systemof banking supervision up and running by the start of next year.
Speaking before the meeting, French President FrancoisHollande said the issue of a banking union would be one of thekey issues facing European leaders as they sought to shore upcrisis defences at their October meeting.
"What I want is that at the European Council we candemonstrate Europe's readiness to settle these questions,notably concerning the banking union," he told a pressconference.
The leaders sidestepped the question of whether or not theybelieved Spain would seek European aid.
"It's up to the Spanish to decide on their own what to do,"Hollande said.
"To put forward an aid plan with the conditions attachedwhich would have to be clarified or not, if they don't need it."
Speaking to reporters at the margins of the meeting, SpanishPrime Minister Mariano Rajoy said he would seek the bestdecision "without ruling out any possibility".
(Reporting by James Mackenzie; Editing by Michael Roddy)
Keywords: EUROPE BANKS/