EU banks crumbling under £910BILLION bad debt as toxic loans threaten CRISIS

Tuesday, January 31, 2017
By Paul Martin

THE European Union’s banking system has £910BILLION worth of bad debt, an independent regulator has revealed as it lays out emergency plans for a “bad bank” contingency.

Tue, Jan 31, 2017

The scale of the EU’s banking problem has become “urgent and actionable”, according to Andrea Enria, chairman of the European Banking Authority.

Mr Enria called for a creation of an EU “bad bank” that would buy up the toxic loans from lenders in an attempt to break a financial cycle of falling profits, pressure on lending and struggling economic growth.

With the lack of a proper market for the selling of bad loans, banks have been reluctant to offload them and accept a price below market value.

Mr Enria envisioned the formation of a taxpayer-packed fund to buy the bad loans from struggling lenders at their “real economic value” – a level which would be determined by the fund at a later date.

The proposal is likely to come under fire from opponents of state-funded aid for banks who will view any intervention as a distortion of the market mechanism.

While Mr Enria is the Chairman of the EBA he has no power to introduce such a body.

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