IMF says govt bonds 10% of Italian and Spanish bank assets

Tight credit still plagues stressed parts of euro area

(ANSA) - Washington, April 9 - Ten percent of the total assets of Italian and Spanish banks are domestic government bonds, the International Monetary Fund (IMF) said Wednesday. Tight credit is still a problem in the parts of the euro area under stress, like Italy and Spain, due to a growing stock of non-performing loans that limit profitability and capacity to provide credit, the IMF reported in its Global Financial Stability Report. "Without a flow of new credit, it will be difficult for banks to support the recovery and to help complete the euro area's transition from financial fragmentation to integration," the IMF wrote.
The volume of non-performing assets in the entire euro area has doubled since the beginning of 2009 to a total of 800 billion euros, the IMF said. "The restructuring of the debt-burdened euro-area corporate sector has been held back by the unfinished repair of bank balance sheets," warned the IMF.