In a joint briefing held in Berlin, French president Nicolas Sarkozy and German chancellor Angela Merkel announced leaders throughout the continent will do everything in their power to make sure lenders have enough capital.
Mr Sarkozy stated: "We will recapitalise the banks. We'll do it in complete agreement with our German friends because the economy needs it, to assure growth and financing."
It is hoped the action will help to ease mounting concerns regarding the state of the economy in Greece and to deflate pressure that has been building up over the last 19 months.
A detailed plan is to be presented before the Group of 20 summit, which will be held on 3 November.
The announcement comes after Morgan Stanley predicted banks across Europe will need around $186 billion of capital in order to help them through the current crisis.
By Tony Aynsley