European Banks Must Write Down Bad Debts, DSGV Says

European lenders must write down the value of their assets where necessary to regain trust, Germany’s DSGV savings-bank lobby said.

“Financial institutions that can no longer survive must be wound down while preserving the system’s stability,” Georg Fahrenschon, president of the association, said today in an e-mailed statement. The Berlin-based DSGV represents Germany’s more than 420 savings banks.

Europe’s banks are fighting to hold onto the confidence of investors and creditors amid a three-year sovereign debt crisis and souring loans in some countries. The euro area’s leaders must also continue to align fiscal policy as their efforts so far have only provided the funding for necessary structural reforms by member states, Fahrenschon said.

“European economic policy, along with the repairs needed in the financial industry, has to push for higher growth even under changed demographic circumstances,” Fahrenschon said. “That puts further efforts in labor, goods and service markets as well as social and education systems on the agenda.”