EU BANKS: more writedowns
Eurozone banks will probably need to write down another $283bn this year and next on bad loans and securities, the European Central Bank said on Monday.
The ECB estimated bank writedowns due to securities – or toxic assets – would total around $218bn from the start of the financial turmoil to the end of 2010, while bad loans would account for another $431bn – a total of $649bn, with an estimated $366bn already announced.
The figures were published in the ECB’s latest Financial Stability Review, which concluded that risks to the financial sector had increased in the last six months amid a deterioration in the economic environment, which is putting pressure on the bottom line of companies and households.
The ECB’s estimate of $649bn for the whole period contrasts with a figure of $904bn from the International Monetary Fund in April.
The ECB said the calculations were surrounded by a high degree of uncertainty stemming from the economic and market outlook, accounting rules allowing banks to delay reporting writedowns and the very uncertain outlook for bank profits.
