March 27, 2019 / 11:15 AM / in a month

Weak euro zone growth could raise stability risks: ECB's de Guindos

FILE PHOTO: Vice-President of the European Central Bank Luis de Guindos speaks during an event marking Latvia's five years with the Euro in Riga, Latvia January 7, 2019. REUTERS/Ints Kalnins

FRANKFURT (Reuters) - Weak euro zone growth is increasing the risk of financial instability as bank profits weaken and sovereign debt sustainability concerns rise, European Central Bank Vice President Luis de Guindos said on Wednesday.

“In an environment where cyclical factors may exert further downward pressure on bank profitability, banks would need to step up their efforts to overcome structural challenges,” de Guindos told a conference in Frankfurt.

“Such measures may include cost reductions – including lower staffing costs and streamlining of branch networks, enhanced digitalization – implying initial, one-off large-scale investments, revenue diversification and the reduction of the stock of non-performing loans in the six countries where levels are still high,” de Guindos said.

Reporting by Balazs Koranyi; Editing by Toby Chopra

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