(RTTNews) - Intensifying sovereign debt crisis could lead to more European banks requiring recapitalization, European Union Competition Commissioner Joaquin Almunia said Tuesday.
Speaking at a press conference in Brussels, Almunia said, "The worsening of the sovereign debt crisis, its impact on a fragile banking system and the continuing tensions in funding markets, all point to the possible need for further recapitalization of banks on top of the nine that failed the stress tests earlier this year."
"This is why it is so important to resolve the sovereign debt crisis without any further delay."
The final bill will only grow bigger and banks will not be able to fulfill their key role of financing the economic growth, if a solution is not quickly found, Almunia warned. The official said he would seek an extension of the crisis state aid rules put in place in 2008/2009 to enable governments to provide -if needed- public support to their banks beyond 2011.
"I would have preferred to go back to normal rules sooner and this was indeed my intention until the summer," Almunia said. "But the situation we are facing these days calls for an extension of the existing State aid crisis regime."
"This means that next year the rescue and restructuring of banks will continue to be assessed on the basis of the present rules," the EU official said.
Banks must turn to the use of public backstops only as a last resort, Almunia stressed. They must first try to fund themselves on the markets, and take all possible steps like the sale of subsidiaries and limitation of dividends, he added.
The adoption of a new, post-crisis rescue and restructuring regime for banks is "the sooner the better", Almunia said. A postponement certainly does not mean a blank check for banks and their governments, he cautioned.
Speaking at a press conference in Brussels, Almunia said, "The worsening of the sovereign debt crisis, its impact on a fragile banking system and the continuing tensions in funding markets, all point to the possible need for further recapitalization of banks on top of the nine that failed the stress tests earlier this year."
"This is why it is so important to resolve the sovereign debt crisis without any further delay."
The final bill will only grow bigger and banks will not be able to fulfill their key role of financing the economic growth, if a solution is not quickly found, Almunia warned. The official said he would seek an extension of the crisis state aid rules put in place in 2008/2009 to enable governments to provide -if needed- public support to their banks beyond 2011.
"I would have preferred to go back to normal rules sooner and this was indeed my intention until the summer," Almunia said. "But the situation we are facing these days calls for an extension of the existing State aid crisis regime."
"This means that next year the rescue and restructuring of banks will continue to be assessed on the basis of the present rules," the EU official said.
Banks must turn to the use of public backstops only as a last resort, Almunia stressed. They must first try to fund themselves on the markets, and take all possible steps like the sale of subsidiaries and limitation of dividends, he added.
The adoption of a new, post-crisis rescue and restructuring regime for banks is "the sooner the better", Almunia said. A postponement certainly does not mean a blank check for banks and their governments, he cautioned.
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