Banking Reform Deal Is in Sight: EU's Rehn

European ministers are likely to reach a deal on banking reform when they meet on Wednesday, the European Union's economic and monetary affairs commissioner Olli Rehn told CNBC.

Wednesday's meeting follows 20 hours of talks over the weekend, when European finance ministers attempted to thrash out details on how bank restructuring should be paid for. The officials agreed to regroup ahead of a two-day EU summit starting on Thursday, after no concrete decision was made.

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"I believe we have a fair chance of reaching an agreement on Wednesday... I hope so. It will be very important to maintain the momentum now," Rehn told CNBC. "It is now important to do everything we can in order to finalize the negotiations towards the banking union."

The agreement will be an important step towards achieving a European banking union, a political vision first laid out a year ago in the hope of achieving a more widely integrated and tightly regulated European banking sector.

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As ministers struggled to agree on the details over the weekend, the main points of contention were reported to be the order in which investors and creditors should pay for bank restructuring, and whether or not savers with more than 100,000 euros ($131,204) should be included.

"I think we have made good progress in the past week," said Rehn. "We have an agreement on the principles and rules on the direct recapitalization of banks, and... made progress on the issue of the Bank Recovery and Resolution Directive, even if the deal isn't yet completely sealed," he added, referring to a directive first published a year ago designed to establish a framework for the recovery and resolution of banks and investment firms in the EU.An agreement should bring certainty to financial markets, which have been volatile amid uncertainty over the talks. Yields on Spanish 10-year bonds, for example, have surged above 5 percent this week, their highest level since the start of April.

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Rehn said the pick-up in European government bond yields was a reminder of the fragility of the European economic situation.

"I believe the pick-up in bond yields is a reminder of the fragility of the situation in the European economy... We have to finalize the work on the banking union and we have to pursue economic reforms in the member states so that we can build foundations for sustainable growth and job creation in Europe," he added.

Deliberations over a banking union in Europe have been partly overshadowed this week by the fallout from the Federal Reserve Chairman Ben Bernanke's potential tapering of his $85 billion a month quantitative easing program, which has prompted a widespread sell-off across global equity markets.

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Rehn told CNBC the situation in the U.S. had emphasized the importance for European policymakers to "stay alert."

"This is indeed a reminder that we have to make sure we don't resort to complacency in Europe... We all have to stay alert now in regards to the impact [this will have] on the future... it's important for the global economy. In the EU we have to stay on the reform course and ensure we do everything we can to ensure a recovery," he added.