EU banks face €195bn loan loss
Frankfurt/Madrid: The European Central Bank warned that eurozone banks face up to 195 billion euros in a “second wave” of potential loan loss over the next 18 months due to the financial crisis, and disclosed it had increased purchases of eurozone government bonds. As the euro recouped losses but remained on the back foot after a cut in Spain’s credit rating and China warned that the global economy remained vulnerable to sovereign debt risks, Spain assured investors it would reform its rigid labour market even if employers and trade unions cannot agree. The ECB said euro zone banks would need to make provisions for further losses this year of 90 billion euros, and 105 billion in 2011, on top of some 238 billion euros in bad debts written off by the end of 2009. That was the first time it has given an estimate for next year. Although total write-downs from bad loans and securities between 2007 and the end of 2010 were likely to be lower than previously expected, the ECB said in its latest Financial Stability Report, writedowns this year and next year would be still larger if heightened sovereign debt risk and the impact of government belttightening dragged down economic growth. The ECB began buying up mostly Greek, Portuguese and Spanish bonds on May 3 in a contentious move to calm debt markets. AGENCIES -- You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en.
