PIMCO Chief: Europe's Banks Must Be Forced To Recapitalize -FT
November 24 2011 - 4:43AM
Dow Jones News
The chief executive of the world's largest bond investment fund
Pacific Investment Management Co. warned Europe's policy makers
Thursday they must force Europe's banks to recapitalize immediately
to cope with the euro zone's deepening debt crisis, the Financial
Times reports.
"Europe's banks must be forced to recapitalize now," Mohamed
El-Erian said in an opinion piece on the newspaper's website.
"There should be no doubt in anyone's mind that what started out
as a dislocation in the periphery of the euro zone has now
decisively breached the firewalls protecting the outer core and is
seriously threatening the inner core. Unless this is countered
quickly, European policymakers will find it even harder to catch up
with the crisis, let alone get ahead of it," he wrote.
The euro slumped and euro-zone bond yields surged Wednesday
after Germany failed to sell all of its bonds at an auction,
indicating that investor fears about the euro zone's debt crisis
are spreading from peripheral member states to core countries.
"Europe must now go well beyond the steps proposed at the
October 26 summit. In addition to specifying higher prudential
capital ratios, governments must now bully banks to act
immediately. Where private funding is not forthcoming, which should
now be the presumption for a growing number of banks,
recapitalization must be imposed, in return for fundamental changes
in the way financial institutions operate and burdens are shared,"
he said.
PIMCO is a unit of Allianz SE (ALV.XE).
Full story:
http://blogs.ft.com/the-a-list/2011/11/24/europes-banks-must-now-be-forced-to-recapitalise/#axzz1ec4yO6oH
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