European banks 'need to shed another $4.4tn from balance sheets'

18 March 2013

Banks in Europe must aim to cut their balance sheets by up to another €3.4 trillion ($4.4 trillion) over the course of the next few years, a new study has shown.

Figures compiled by PwC - which, the Financial Times reports, will be published tomorrow (19 March) - have established that the issue of the continent's financiers having to retreat from their traditional lending and selling businesses is likely to be worse than originally feared.

Companies had already prepared themselves to dispose of non-core assets worth around €2.4 billion in the near future, but PwC's analysis has indicated that firms may need to make significantly higher savings to meet incoming regulations regarding risky assets on balance sheets.

Richard Thompson, chairman of the consultancy's portfolio advisory group, said that while European banks are becoming "more transparent in relation to the size of their non-core portfolios", their "deleveraging agenda could have a sizeable impact on economic growth".

By Claire Archer

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