Luxembourg - European Union states which intervene to bail out failing banks should have the right to fire the banks' managers or cut their pay, EU finance ministers agreed Tuesday in Luxembourg.

If the state is forced to intervene, "the government should be in a position to bring about a change of management," the finance ministers of the EU's 27 member states said in a statement.

At the same time, "existing shareholders should bear the due consequences of the intervention" and "the management should not retain undue benefits," the ministers agreed.

The political agreement comes after 10 days of chaos in the European banking sector, with governments in Britain, Ireland, Germany, the Benelux states and France all stepping in to save the one-time giants of their banking sectors.

The collapse of banks such as Fortis and Hypo Real Estate has led to public outcry and demands for the managers of such institutions to pay the penalty for what is now seen as irresponsible management of depositors' and shareholders' funds, rather than receiving generous severance packages.

Future state interventions should "take care of the interests of the tax-payer and should make sure that those who are responsible for the problems we have met feel the consequences," French Finance Minister Christine Lagarde, who chaired the meeting, said. (dpa)