Europe Banks Fail to Cut as ECB Loans Defer Deleverage
Bloomberg reported, according to data compiled by the European Central Bank (ECB), that lenders in the euro-zone increased assets by 7% to 34.4 trillion euros ($45 trillion) in the year ended July 31.
Bloomberg said that European banks pledged last year to cut more than $1.2 trillion of assets to help them weather the sovereign-debt crisis. However, ECB President Mario Draghi’s decision nine months ago to provide more than 1 trillion euros of three-year loans to banks eased the pressure to sell assets at depressed prices, Bloomberg noted.
Bloomberg said that analysts predicted that European lenders would have to shrink more as regulators requested higher capital and investors, who became less convinced that governments would be able or willing to bail out their largest banks, demanded bigger returns for lending to those firms.
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