Frankfurt am Main — Eurozone banks have made progress since the financial crisis, but must do more to put their houses in order during economic good times, European Central Bank (ECB) watchdogs said on Wednesday. "Certain banks must do more. In particular, they must clean up their balance sheets," Banking Supervisory Board chairwoman Danièle Nouy said in Frankfurt. Top of the list is a €760bn mass of bad loans that was still weighing on banks’ balance sheets in the third quarter of 2017, a figure that had fallen by €200bn over two years. So-called nonperforming loans (NPLs), — on which borrowers have failed to keep up with repayments — "drag down profits, they divert resources that could be put to more productive use, and they keep banks from financing the real economy", Nouy said. "Banks should use the good times to reduce NPLs... once a downturn sets in, it will become much harder," she added. For its part, the ECB will lay out more clearly how it expected banks to set aside cash ...
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