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Luxembourg - Pressure is building for European ministers to provide financial aid to banks burdened by toxic eurozone debt, as fears Greece may be just weeks from default threatened to choke the region’s money markets.
Austrian Finance Minister Maria Fekter said making banks crisis-proof was a top priority, in comments ahead of a meeting of EU finance ministers where British chancellor George Osborne is set to underscore the message.
“Making the banks secure in crisis is the top priority for now,” said Fekter, adding that countries in the eurozone had been urged at a meeting of ministers from the single currency area on Monday to examine backstops, a term that translates to further state handouts.
Franco-Belgian bank Dexia , which has a large exposure to Greek debt and is struggling to borrow, saw its shares dive by a third on Tuesday, underlining the urgency of the situation facing the region’s banks.
It was a message echoed by Swedish Finance Minister Anders Borg, who flagged the risks to the sector if a rescue programme for Greece were to unravel because the country was in danger of missing the targets it had agreed to.
“It is quite clear that there is evident risk that the Greek programme is off track,” said Borg, whose country is not in the eurozone.
“We have to rethink how we can faster move forward towards backstops and firewalls to be able to handle a situation where the programme is off track,” he said.
“A very important part is to set up the possibility of recapitalising banks - that is in essence the backstop.”
Austrian Finance Minister Maria Fekter said making banks crisis-proof was a top priority, in comments ahead of a meeting of EU finance ministers where British chancellor George Osborne is set to underscore the message.
“Making the banks secure in crisis is the top priority for now,” said Fekter, adding that countries in the eurozone had been urged at a meeting of ministers from the single currency area on Monday to examine backstops, a term that translates to further state handouts.
Franco-Belgian bank Dexia , which has a large exposure to Greek debt and is struggling to borrow, saw its shares dive by a third on Tuesday, underlining the urgency of the situation facing the region’s banks.
It was a message echoed by Swedish Finance Minister Anders Borg, who flagged the risks to the sector if a rescue programme for Greece were to unravel because the country was in danger of missing the targets it had agreed to.
“It is quite clear that there is evident risk that the Greek programme is off track,” said Borg, whose country is not in the eurozone.
“We have to rethink how we can faster move forward towards backstops and firewalls to be able to handle a situation where the programme is off track,” he said.
“A very important part is to set up the possibility of recapitalising banks - that is in essence the backstop.”
