European banks to struggle, may need to cut costs

Risks to financial stability have increased in recent months: ECB

FRANKFURT, Germany, May 24, (Agencies): European banks are likely to struggle to make profits in months ahead and may need to cut costs, merge or change their business strategies to return to solid health, a report said Tuesday.

In its review of financial stability in the 19-country eurozone, the European Central Bank said the region’s banking system had weathered volatility in markets at the start of the year. But it said “euro area banks continue to be confronted with an outlook of low profitability,” weighed down by low interest rates, a tepid recovery in the euro countries, and by large numbers of bad loans in some countries.

The ECB, which is responsible