European Banking Authority Chairman Andrea Enria on Sept. 28reiterated suggestions that stateaid could be part of the solution to help troubled banks get rid oftoxic assets, The Wall Street Journalreported the same day.
"I think the authorities should consider whether if theprocess is not going fast enough … state aid could be part of the ingredientsto accelerate this process," Enria reportedly said. He noted that Europeanbanks' bad loans problem is "three times as high as other majorjurisdictions such as the U.S. or Japan."
Enria said banks' nonperforming loans are unlikely totrigger a new crisis in the sector, but they drag down profitability andnegatively impact bank's lending abilities, according to the report. Aside fromtoxic assets, conduct legacy issues are also adding to challenges faced byEuropean banks, with Deutsche BankAG facing the threat of a $14 billion in the U.S. over the allegedmisselling of MBS.