Tags: EU | Help | Banks

Report: EU Official Doesn't Rule Out Help for Banks

Thursday, 22 Sep 2011 06:43 AM

If some European banks need to be recapitalized, the European Commission would prefer that the support come from the private sector, the EU's internal market commissioner said in a newspaper interview.

Michel Barnier told le Figaro in an interview published on Tuesday that he could not rule out that some European banks would need state aid.

"The days are behind us when the banks can be bailed out with taxpayer funds," he said. "But it cannot be ruled out that some banks will need state help. The European Commission is prepared for such a scenario and will oversee it."

Investors have sold off European banking shares in recent months, spooked by concerns over whether financial institutions could withstand a default of Greece as well as another economic downturn.

The IMF recently urged Europe to move towards recapitalizing its banks, but officials in Europe have resisted such across-the-board calls.

Asked whether it was time to recapitalize Europe's banks, Barnier replied: "The IMF was correct to emphasize the risks of a second global recession. But I do not share its view on the capital needs of the banking sector."

Barnier pointed out that nine banks had failed stress tests carried out in July, and 16 "barely made it" and needed to be recapitalized. "We would prefer this to be done first through private means," he said.

© 2015 Thomson/Reuters. All rights reserved.

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