FTAdviser.com

Advertising

Speaking ahead of the publication of the June 2009 ECB Financial Stability Review, Lucas Papademos, vice-president of the ECB, said the total amount of potential write-downs of euro area banks on their securities and loans over the period 2007 to 2010 could amount to around $649bn (£394bn).

He also said the potential future losses between of euro area banks could be around $283bn (£172bn) until the end of 2010, but that these potential losses would be cushioned by provisions and retained earnings over the next two years.

He said: "I want to stress that estimates of potential future write-downs on banks’ securities and loans depend crucially on the assumptions made and the methodology used and they are subject to a considerable margin of error.

"Bearing in mind the significant uncertainty surrounding all available estimates, further efforts are needed to obtain as accurate figures as possible because the magnitude of the expected potential write-downs has weighed heavily on investor confidence and has affected already-weakened financial institutions."