Euro zone banks that
failed or barely passed this year's health checks will have to
demonstrate they can make sustainable profits and may need to sell off
loss-making units, the European Central Bank's top supervisor said.
"Partly because of the financial situation in Europe and partly because of the structure of the banking systems in Europe ... the sustainable profitability is probably the main challenge and the main risk for banks in the coming years," Nouy told Reuters. "They have to establish sustainable profitability."
She added: "There are a number of banks that went through the comprehensive assessment, but might not go through next time."
From this month, the ECB became the direct supervisor for the single currency area's top 120 banks like Societe Generale and Deutsche Bank with powers to force them to top up their capital buffers or make other changes to keep them safe and sound.
Read more: ECB's Nouy Says Banks Must Show They Can Make Profits
"Partly because of the financial situation in Europe and partly because of the structure of the banking systems in Europe ... the sustainable profitability is probably the main challenge and the main risk for banks in the coming years," Nouy told Reuters. "They have to establish sustainable profitability."
She added: "There are a number of banks that went through the comprehensive assessment, but might not go through next time."
From this month, the ECB became the direct supervisor for the single currency area's top 120 banks like Societe Generale and Deutsche Bank with powers to force them to top up their capital buffers or make other changes to keep them safe and sound.
Read more: ECB's Nouy Says Banks Must Show They Can Make Profits
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