In its latest report, the European Central Bank warned of a rising risk of bank failures in the European Union. The 18 month long recession has resulted in many debtors falling behind in payments, or unable to repay their loans at all. This is placing strains on financial institutions still not fully recovered from the global banking meltdown in 2008.
The ECB cited staggering levels of unemployment and falling home prices in the southern nations such as Greece and Spain, and bad commercial loans on the books of banks all across the 27 member organization, including Germany, as factors in the banking system’s vulnerability. Banks in Europe are generally considered ill-equipped to weather another financial shock without collapsing.