WASHINGTON (Reuters) - European Central Bank President Mario Draghi said on Thursday he expects bank lending, a key impediment to growth in the euro zone at the moment, to pick up early next year.
The ECB is putting the euro zone’s 131 largest banks through a thorough balance sheet review to weed out soured loans and check whether they have valued assets correctly before it takes over as their new centralized supervisor in November.
Draghi said since the summer last year, banks that will come under its direct watch from November had strengthened their balance sheets by almost 203 billion euros, through capital hikes, bond issuances or retained earnings for instance.
The clean up will put banks in a better position to lend, which is important for the recovery in the euro zone that relies strongly on bank funding.
“I expect credit to pick up soon next year,” Draghi said in a keynote speech at the Brookings Institution.
Reporting by Jan Strupczewski; Writing by Eva Taylor; Editing by Paul Carrel