ECB fears new bank crisis next year: report

By AFP

July 15, 2010 Updated Jun 14, 2009 at 9:42 PM CDT

The European Central Bank is monitoring 25 banks which are considered critical to the system amid fears that recession could spark another crisis in 2010, the Daily Telegraph reported on Thursday.

Dejan Krusec, the ECB's financial stability expert, was quoted as saying that the banks were strong enough to weather a so-called V-shaped, or sharp, recession with a swift recovery -- but not if the downturn were prolonged.

"If this (recession) is U-shaped, the banks will have problems. There are 25 banks we monitor that are strategically important," said Krusec, cited by the newspaper, speaking at a Fitch Ratings conference in London on Wednesday.

"The problem is not 2009. Euro-area banks are well enough capitalised to cover losses. The problem is 2010. We are concerned about the length (of the recession)."

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