EU to boost crisis-hit banks | The Daily Star
11:00 PM, July 07, 2009 / LAST MODIFIED: 11:00 PM, July 07, 2009

EU to boost crisis-hit banks

European finance ministers agreed Tuesday to make it easier for banks to create strong financial cushions so they can better deal with future crises, amid mounting concern about rising credit losses.
"We need a more robust financial system in Europe," Swedish Finance Minister Anders Borg told reporters, after chairing talks with his EU counterparts in Brussels.
The ministers gave their backing to help create "capital buffers" through accounting reforms and other measures "to be raised in good times and to be drawn down in downturns," a statement said.
The economic cushions would be built up with "provisions deducted from profits in good times for expected losses on loan portfolios," it said.
Such a buffer already exists in Spain to help counter the fallout from the cyclical nature of the economy, and the European Commission is due to make a proposal in October on changes to EU laws needed to achieve the aim.
The move comes amid growing calls to clean up European bank balance sheets.
The European Central Bank warned last month that eurozone banks might have to take another 283 billion dollars (204 billion euros) in write-downs by the end of 2010, mainly to account for risky loans.

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