© Reuters. ECB HQ and skyline with its financial district are seen in FrankfurtFRANKFURT (Reuters) – The European Central Bank must complete a cleanup of the euro zone’s banking sector if it is to survive the next financial crisis, the ECB’s next top watchdog Andrea Enria said on Tuesday.
The incoming chair of the ECB’s Single Supervisory Mechanism (SSM) said ridding banks of unpaid loans inherited from the last recession would remain the SSM’s priority under his stewardship in the next five years.
Enria’s remarks to European Union lawmakers before a vote to confirm his appointment were likely to ruffle feathers in his native Italy, where the burden of unpaid loans is large and banks reluctant to sell them at a loss.
“The first (priority) is completing the cleaning of bank balance sheets,” Andrea Enria told the European Parliament’s committee on economic affairs in Brussels.
He made “promoting banking integration” across borders his second priority. This has been a longstanding but elusive goal for the ECB since banks retreated to home turf during the 2010-12 debt crisis.
“I’m convinced that the banking union would not survive if the next crisis catches us still dealing with the legacy of bad assets from the previous one, or with the market fragmented along national lines,” Enria said.
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Source: Investing.com
