Europe is struggling with a select group of banks that are addicted to easy credit funding from the ECB, according to the Financial Times.
And now, it seems, the ECB’s leadership is going to take aim at these troubled institutions and try to make them kick the habit.
But it isn’t exactly an easy drug to quit. These banks are, according to the FT, located in Ireland, Portugal, and Greece. Which means they are struggling with balance sheet issues that are, potentially, getting worse.
The continued slow down in these economies may prevent their weakest banks from moving off the ECB’s lending facilities and back to pre-crisis facilities. What is known is that the closing of these facilities is not likely to happen until sometime in 2011.
The cost may be more honesty for the troubled banks still in need, as they are outed and forced to come clean on their continuing struggles. The banks may even need further bailouts to clean up their balance sheets.
This tedious bank cleanup process in Europe, with anemic growth in the immediacy, is likely to continue at a slow pace.