ECB Fears Banking Crisis in 2010: Report

The European Central Bank fears another banking crisis in 2010 if the recession drags on, said ECB financial stability expert Dejan Krusec on Wednesday, cited on the website of the Daily Telegraph.

If there is a quick ‘V-shaped’ recovery the banks would be strong enough to weather the downturn, he said.

“If this is ‘U-shaped’, the banks will have problems. There are 25 banks we monitor that are strategically important,” Krusec was quoted as saying to a Fitch Ratings conference on Eastern Europe.

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“The problem is not 2009. Euro-area banks are well enough capitalized to cover losses. The problem is 2010. We are concerned about the length (of the recession),” said Krusec.

The newspaper added that the ECB forecast of a 4.6 percent contraction this year with no recovery until mid-2010 precluded any chance of a V-shaped rebound.

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