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FRANKFURT (Reuters) - Banks across the euro zone still need to take bold steps to reduce their pile of bad debt and must not wait for the public sector to come up with an overarching solution, European Central Bank supervisor Pentti Hakkarainen said on Thursday.
Sitting on around 900 billion euros of soured debt, euro zone banks have been slow in getting rid of their non-performing loans, with many arguing that a state-backed bad bank is needed since the private market for such loans is small and illiquid, raising the prospect of huge losses.
Hakkarainen added that banks must improve efficiency and a credible threat of failure that pushes losses onto private investors instead of the taxpayer is fundamental to a healthy bank sector.
Reporting by Balazs Koranyi; Editing by Angus MacSwan