European Debt Losses Threaten Bank Stability

European banks could face liquidity problems and overall profitability could decline should the euro debt crisis force lending institutions to write-off huge losses. The European Central Bank is providing funds to lending institutions, but this is at best, a temporary solution.

“There is a lot of mistrust,” said Christoph Rieger, co- head of fixed-income strategy at Commerzbank AG in Frankfurt. “Banks are trading with the ECB rather than with each other.”

Source: Bloomberg

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