Europe

Europe

EU official admits worsening situation of banking sector

04 October 2011 21:14 (UTC +04:00)

Baku-APA. European Commissioner for Internal Market and Services Michel Barnier said on Tuesday that situation of the European banking sector is worsening since the bank stress test in July, APA reports quoting Xinhua.

"The situation is worse since the stress test. That’s a fact of life," Barnier told a press conference held after the monthly meeting of European Union finance ministers.

"We have to deal with the liquidity problems rather than sovereign problems," the commissioner admitted.

He said that some banks do need further capital more quickly than previously disclosed.

Barnier suggested that a proper level of capitalization is not the only solution to the crisis, good governance on internal and external level should be part of the response, adding "resolution is also part of the solution."

To reassure investors, the EU conducted another bank stress test this year after the first one was dismissed as not strict enough. Eight out of 90 European banks failed this year’s test and another 16 banks dropped in the danger zone.

With the Greek debt crisis worsening, European banks with a high exposure to Greek debt saw their shares dived, which triggered further fear of a contagion of the crisis to the banking sector.