Fears Greek and Italian lenders could COLLAPSE eurozone if money-printing is cut
ITALIAN and Greek lenders could topple Europe’s financial system if the European Central Bank (ECB) pulls its mammoth money-printing programme, top monetary policymakers fear.
By LANA CLEMENTS
Express.co.uk
Wed, Mar 15, 2017
Banks saddled with bad loans would pose a greater risk to eurozone should the central bank start to reduce its extraordinary support for the economy, according to an European Union (EU) internal report.
The ECB is currently injecting €80billion into the eurozone every month, which will reduce to €60billion from next month as part of a programme that runs until the end of this year.
But there are now concerns about how struggling lenders weighed down by so-called non-performing loans would cope when the support is cut.
Risks posed by bad loans to the whole EU banking system may increase “should monetary conditions become less accommodative”, according to the report.
Last year, Italy’s oldest bank Monte dei Paschi teetered on the brink amid €40billion (£33billion) of soured loans.
Overall Italy’s lenders hold around £270 billion of the bad loans – around a third of the eurozone total.
It also a big issue for Greek lenders, as well as banks in Cyprus, with around half of loans likely to default, according to the latest European Banking Authority (EBA) data.
Around a fifth of loans in Portugal are also non-performing.
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