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EU official tells banks to admit their losses
March 15, 2009, Sunday
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Print Edition
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THE European Union's top antitrust official yesterday called on banks to show more leadership and come clean about potential losses in order to restore trust in the financial system.
EU Competition Commissioner Neelie Kroes asked a Frankfurt banking conference why banks had not done more to fix the crisis of confidence that held back lending between financial groups and sent banking shares plummeting in recent months.
"Where is the leadership?" she said. "Why not create a group of leading European banks and come up with a public statement indicating you trust each other, you are strong and investors should buy your shares?"
During the credit boom, banks bought risky, complex securities and derivatives that have now plunged in value over the past year, punching huge holes in their balance sheets.
That has forced the banks to shore up their financial position by putting large amounts of money aside to cover potential losses - including some of the billions of euros in bailout money they have received from governments.
Kroes told the banking conference that high levels of transparency about these losses was "essential for determining the full scope of our collective problems and rebuilding trust."
Under EU guidelines for governments planning to insure or buy up these so-called "toxic assets," public money "will simply not be open to banks which do not want to open their books in return," she said.
EU Competition Commissioner Neelie Kroes asked a Frankfurt banking conference why banks had not done more to fix the crisis of confidence that held back lending between financial groups and sent banking shares plummeting in recent months.
"Where is the leadership?" she said. "Why not create a group of leading European banks and come up with a public statement indicating you trust each other, you are strong and investors should buy your shares?"
During the credit boom, banks bought risky, complex securities and derivatives that have now plunged in value over the past year, punching huge holes in their balance sheets.
That has forced the banks to shore up their financial position by putting large amounts of money aside to cover potential losses - including some of the billions of euros in bailout money they have received from governments.
Kroes told the banking conference that high levels of transparency about these losses was "essential for determining the full scope of our collective problems and rebuilding trust."
Under EU guidelines for governments planning to insure or buy up these so-called "toxic assets," public money "will simply not be open to banks which do not want to open their books in return," she said.
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