OECD warns Europe over new bank rescues
Tuesday 14 December 2010
More European banks may have to be rescued, the Organisation for Economic Co-Operation and Development, the "club" of the world most advanced economies, warned today.
Against a backdrop of "muted" recovery, the OECD said that, while substantial support to Europe's banks should be gradually withdrawn, "further recapitalisation of banks could be necessary [and] all countries should have a full set of effective, credible and harmonised bank resolution tools".
The small Spanish banks, the cajas, are most at risk from a further slump in property values.
And, more than three years since the first European banks ran into difficulties, and high profile cross-border failures such as Fortis, the OECD also said "weaknesses in cross-border supervision remain a risk". To avoid a repeat of this year's sovereign debt crises, the OECD argued: "Sanctions should range from intrusive surveillance and warnings to financial sanctions."
The OECD's intervention comes as two other influential bodies – the Bank for International Settlements (representing the world's central banks) and the European Investment Bank implicitly blamed Chancellor Angela Merkel of Germany and some senior French figures for the recent run on Ireland.
The BIS said: "The surge in sovereign credit spreads began on October 18, when the French and German governments agreed to take steps that would make it possible to impose haircuts on bonds should a government not be able to service its debt".
EIB president Philippe Maystad added that while that deal was desirable, "the way it was presented created total confusion". The new rules are supposed to operate only on debt issued after 2013.
- 1 Finland schools: Subjects scrapped and replaced with 'topics' as country reforms its education system
- 2 The West has it totally wrong on Lee Kuan Yew
- 3 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
- 4 Scientists have discovered a simple way to cook rice that dramatically cuts the calories
- 5 Zayn Malik quits One Direction: Hundreds of workers request compassionate leave following band member's exit
Germanwings captain Patrick Sondenheimer tried to break into locked cockpit door 'with an axe' as plane was descending
Amanda Knox murder conviction: Italian court overturns verdict for US student and Raffaele Sollecito in the killing of Meredith Kercher
Saudi Arabia says it won't rule out building nuclear weapons
The battle for the Middle East's future begins in Yemen as Saudi Arabia jumps into the abyss
#FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
Nigel Farage brands LGBT activists 'filth' and 'scum' and accuses them of scaring away his children after they invade his local pub
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Russia threatens Denmark with nuclear weapons if it tries to join Nato defence shield
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Germanwings plane crash live: Co-pilot Andreas Lubitz wanted to 'do something people would remember him for'
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...