Some euro zone banks 'in denial' about bad loans: ECB's Nouy

Daniele Nouy in Madrid, Spain May 24, 2016. REUTERS/Susana Vera

FRANKFURT (Reuters) - Some euro zone banks are “in denial” about their problems with unpaid loans, the European Central Bank’s chief supervisor has told a Finnish weekly.

“In all euro area countries, there are ... banks that are not doing so well but are committed -- and bravely so -- to tackling their problems; and then others that are somewhat in denial and will have to change to improve,” Daniele Nouy told Talouselämä in an interview published on Friday.

She was responding to questions about a request for public help by Italy’s Monte dei Paschi di Siena BMPS.MI and apparent failures to clean up the banking sector in that country and in Germany.

Struggling with a large and growing pile of bad loans, Monte Paschi has applied for a recapitalization by the Italian state but the rescue has yet to be approved by European authorities.

The ECB, as the euro zone’s top banking watchdog, set Monte Paschi’s capital shortfall at 8.8 billion euros in December but Nouy said earlier this week “additional discussions” about the bank’s losses were necessary.

Monte Paschi’s Chairman Alessandro Falciai said on Wednesday he remained “greatly optimistic” over the outcome of the bank’s request.

Spain's Banco Popular POP.MC is also struggling under the weight of 37 billion euros non-performing real estate loans but the country's economy minister said on Thursday it should not expect to receive public funds.

The Spanish bank is considering a merger instead.

Reporting by Francesco Canepa; Editing by Catherine Evans