June 7 (Bloomberg) -- The European Union must step up efforts to improve banking governance as it seeks closer economic union to tackle the sovereign-debt crisis, Bank of Italy Director General Fabrizio Saccomanni said.
With European lenders and sovereigns caught up in a “vicious circle,” policy makers must make a “total commitment” to introduce bank-deposit guarantees, a centralized system of bank supervision and a crisis-resolution mechanism for distressed lenders, Saccomanni said in a speech today in Palermo, Sicily.
Italian banks also need to take steps to boost profitability by cutting costs and increasing efficiency, Saccomanni said. Banks need to “rationalize” their branches and units to avoid overlap, he said.
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