European banks mull 20-bln-euro private bailout fund: report

12th July 2010, Comments 0 comments

Several European banks are considering the establishment of a 20-billion-euro private sector recovery fund that could bail out financial institutions, the head of UniCredit bank told a paper Monday.

Writing in the Financial Times, chief executive of the Italian bank Alessandro Profumo, said that the 25.2-billion-dollar fund could provide help to European banks in the event of another crisis.

Banks would be able to turn themselves around without state bailouts, he said.

"With voluntary contributions from the large European cross-border banks -- say, the top 20 -- a European recovery fund could accumulate a significant amount of risk capital (20 billion euros) over a few years," he said.

"The option for authorities to use the fund to stabilise one or a few large, ailing banks could assure the market that a crisis could be contained at an early stage.

"The fund would not require a contribution from member states or European authorities."

Profumo has already pushed the plan with other leading eurozone banks, including Deutsche Bank and Santander, and will promote the idea to others in coming weeks, said the paper.

© 2010 AFP

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