Some euro zone banks are "in denial" about their problems with unpaid loans, the European Central Bank's chief supervisor has said.
"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 said.
She was responding to questions about a request for public help by Italy’s Monte dei Paschi di Siena 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 recapitalisation 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 in December but Nouy said earlier this week "additional discussions" about the bank's losses were necessary.
Monte Paschi's Chairman Alessandro Falciai said earlier this week he remained "greatly optimistic" over the outcome of the bank's request.
Spain's Banco Popular is also struggling under the weight of €37 billion non-performing property loans but the country's economy minister said yesterday it should not expect to receive public funds.
The Spanish bank is considering a merger instead.