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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