Merkel: Banks should be recapitalised if needed

6th October 2011, Comments 0 comments

Banks should be recapitalised as quickly as possible if needed, German Chancellor Angela Merkel said Thursday, as concerns grow that the eurozone debt crisis is spilling over into a credit crunch.

"I think there would be a very clear need (to recapitalise) because this is money that is safely invested," Merkel said, adding, "I don't think we should hesitate."

There would be "far greater damage" if banks needed to be rescued by governments, she said.

"But the first step is for banks to recapitalise themselves," she stressed.

Later, she said the EU's bailout fund, the EFSF, could step in to provide more cash to banks but "only under very certain conditions ... and only if the euro as a whole were to be threatened."

"I would like to recall that the EFSF is a facility which serves to provide assistance at a point in time when a country would threaten the stability of the euro and the eurozone as a whole," the chancellor said.

Merkel was speaking at a joint press conference with the heads of the International Monetary Fund, the World Bank and the Organisation for Economic Cooperation and Development.

© 2011 AFP

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