Business | Economy
ECB official warns financial crisis will continue to dog global banks
Draghi says Europe is better protected than US or emerging markets.
- Reuters
- Published: 00:02 September 14, 2008
Nice, France: Banks are a long way from emerging from the crisis affecting the world financial system, Mario Draghi, a European Central Bank (ECB) Governing Council member and the head of the Financial Stability Forum, said on Saturday.
Speaking after a meeting of European Union finance ministers and central bankers in Nice, the Italian central bank chief told reporters the banking sector was adequately capitalised but that some institutions would face problems as the crisis continued.
"Various banks - within a sector that is basically well capitalised overall - will be in difficulty," he said, adding that European banks seemed to be far better protected from the crisis than US or emerging market counterparts.
"The conclusion is that there will be a series of consolidations in the world banking system. We've seen some already but we are a long way from seeing the end of this."
His comments came as US officials worked to broker a deal to sell investment bank Lehman Brothers, the latest victim of a crisis that has shaken the US banking sector and had knock-on effects across the global financial sector.
As head of the Financial Stability Forum, the group set up in 1999 to improve supervision and surveillance in the wake of the Russian and Asia financial crises, Draghi is a strong advocate of more efficient regulation.
He said it was in the banks' own interests to provide better information.
"The less transparent the banking system is, the more the market will require capital," he said.
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