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Euro zone banks must stop waiting for state help with bad loans: ECB
September 22, 2017 / 7:28 AM / 25 days ago

Euro zone banks must stop waiting for state help with bad loans: ECB

European Central Bank (ECB) headquarters building is seen in Frankfurt, Germany July 20, 2017. REUTERS/Ralph Orlowski/Files

FRANKFURT (Reuters) - Euro zone banks have not done enough to wind down their excessively large pile of soured loans and need to take action now instead of waiting for government help, European Central Bank supervisor Pentti Hakkarainen said on Friday.

“The relative slow pace of progress may partially reflect the lower incentives that banks have to fix things whilst interest rates remain low,” Hakkarainen told a conference.

“We do not want a situation where bank losses generated during macroeconomic downturns are socialised as a matter of course,” he added. “Banks should therefore recognise that they are the primary owners of any asset quality and non performing loan problems that may have arisen.”

Euro zone banks still hold around a trillion euros worth of bad debt, mostly a legacy of the bloc’s debt crisis.

Reporting by Balazs Koranyi

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