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ECB says bank solvency, aid rules needs redefining

FILE PHOTO: European Union flags flutter outside the headquarters of the European Central Bank (ECB) in Frankfurt, Germany, April 21, 2016. REUTERS/Ralph Orlowski/File Photo

FRANKFURT (Reuters) - The definition of when a bank is solvent and when it can receive state help need redefining, a top European Central Bank supervisor said on Thursday.

“These aid rules might need an update that would align them with the new European resolution regime,” Sabine Lautenschlaeger told a conference in Vienna.

“We need to reach a common understanding of how to define solvency, in particular its forward-looking aspect.”

The ECB and, to a greater extent, the Single Resolution Board have received criticism from some investors and politicians for their handling of three bank failures last summer, including two Italian banks that were partly rescued by their government.

Reporting By Francesco Canepa