MW: ECB's Draghi: Need to tackle bad loans in eurozone
European Central Bank President Mario Draghi on Thursday stressed the need to tackle the level of bad loans in the eurozone banking system, saying they are a problem for future profitability and bank lending. Speaking at the ECB's monetary policy news conference, Draghi outlined three ways to address non-performing loans, which are particularly an issue in Italy. The central bank boss suggested a consistent supervisory approach, a development of a full-functioning NPL market and government action. "And possible also having a public backstop," he said. "We want to avoid fire sales". The comments come after concerns have risen in recent weeks that the level of bad loans at Italy's banks could blow up the country's financial system and threaten its membership in the eurozone. Italian banks are neck-deep in non-performing loans, with official data putting the total at around 200 billion ($220.5 billion), or around 8% of total loans. The issues have been reflected in Italian bank shares, with focus particularly on Siena-based Banca Monte dei Paschi BMPS, +2.33% which is down 74% so far this year. The European Central Bank earlier this month asked BMPS to cut its gross nonperforming loan exposur to €14.6 billion by 2018 from €46.9 billion in 2015.