Businessweek: European Banks: More Pain on the Way? - By Mark Scott

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As Europe enjoys a long-awaited summer heat wave, a sense of sunny optimism has taken hold of its financial capitals. Many in the region's beleaguered banking community reckon the worst of economic downturn is over. Equities markets have rallied since early 2009, property prices are leveling off, and signs of a recovery in consumer and industrial confidence are starting to surface. But before Europe's financial-services industry pats itself too hard on the on the back, bankers and investors may want to heed the sobering analysis released recently by the European Central Bank (ECB). Analysts at the ECB, which oversees the 16-country bloc that uses the euro, forecast that euro-zone banks could still record a further €283 billion ($398 billion) in writedowns by the end of next year, predominantly from defaulting corporate and consumer loans. cts that euro-zone banks could record as much as $398 billion in new write downs by 2010.