ECB warns of effects of governments' heavy funding needs

The European Central Bank said bond issuance by commercial banks could be crowded out by heavy funding needs of European governments. The situation could heighten rollover-financing risk for some financial institutions, according to the ECB's Financial Stability Report. "The risk that this implies for bank funding costs also raises the possibility of a setback to the recovery in banking sector profitability," according to the report. The report also warns that euro-zone banks face writedowns of as much as €195 billion this year and next.

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