Bad loans are still a serious
challenge facing Italian banks and all potential instruments to
tackle the problem need to be considered, including the creation
of a "bad bank" structure, said Danièle Nouy, president of the
supervisory council at the European Central Bank.
Nouy said the problem of non-performing loans was down to a
series of factors including general economic conditions and
failings in debt recovery systems.
When discussing the possibility of creating a bad bank, a
vehicle that could isolate bad assets, Nouy said "we need to use
all possible instruments and I hope that this structure can go
ahead".
She also said Italian banks needed to reassess their
business model to address weak profitability.
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