Babacan held a press briefing in Ýstanbul on Thursday before getting on a plane that will take him and an accompanying Turkish delegation to a G20 ministerial meeting in Mexico City. “Obviously, certain measures should be taken in many countries. Reforms should also be made. It is not impossible to rescue them. We are still hopeful. A recovery process can begin if the proper policies are made and necessary steps are taken ,” he said, adding that it may take “years or even decades for certain countries to reduce their debt stock to reasonable levels.”
The 27-member EU embarked on a tortuous journey when it decided to bail out Greece with a large loan package two years ago. Heading down the Greek path, Ireland and Portugal became the other recipients of European taxpayers’ money in order not to default on their massive debts. However, Greece was obliged to seek another, even larger, rescue package from the EU. The union’s finance ministers signed off on that latest loan agreement -- demanding heavy cuts in public spending and extensive privatizations from the Greeks in return -- on Tuesday but despite all efforts, including a massive write-down of Greek debt by private creditors as part of the second package, markets are highly suspicious if the continent will be able to weather this storm. It is a troubling issue for Turkey since the EU is its largest trade partner, and it goes without saying that any turbulence within the union will also have an adverse impact on the country’s economic prospects.
Babacan is of the opinion that it is more important than ever for the EU member countries to act collectively rather than on their own or in groups within the bigger bloc to put their financial house in order. This prospect, however, was dealt a blow when major banks from France, Germany and the United Kingdom, the three biggest economies of the union, lined up to announce billions of euros lost through write-downs of Greek loans. “We are in the worst economic crisis since 1929,” Crédit Agricole Chief Executive Jean-Paul Chifflet said. His bank reported a record quarterly net loss of 3.07 billion euros ($4.06 billion), performing worse than expected from the cost of shrinking its balance sheet and after a 220 million euro charge on its Greek debt. “We think 2012 is going to still be a tense period,” Chifflet said. UK’s Royal Bank of Scotland (RBS) has marked its Greek bonds at a 79 percent loss -- or 1.1 billion pounds -- for 2011. The state-owned bank likewise posted a fourth quarter loss of nearly 2 billion pounds on Thursday. Problems in Europe’s banking sector are far bigger than Greece, however. “We have reduced the balance sheet of RBS by over 700 billion pounds of assets. That is roughly twice the size of the entire national debt of Greece,” said RBS boss Stephen Hester. The region’s banks are still repairing the damage of the financial crisis and shrinking their assets. They must also find 115 billion euros by the middle of this year to shore up their balance sheets against future shocks. But any weakening in the economy will hit earnings and make that goal harder to achieve. Germany’s Commerzbank, whose fourth-quarter earnings were spoiled by a 700 million euro hit on Greek sovereign debt, needs to find 5.3 billion euros to meet the stringent new capital requirements set by Europe’s banking regulator. It has now lost more than 2 billion euros on its Greek bonds. Commerzbank said it could reduce some of its shortfall by shedding risky assets, though the debt crisis still had the potential to disrupt earnings. “The high degree of uncertainty associated with the European sovereign debt crisis will ... continue to pose challenges for us,” Chief Executive Martin Blessing said.Bailed out Franco-Belgian bank Dexia warned on Thursday it risked going out of business. It suffered a 2011 net loss of 11.6 billion euros, hit by its break-up and exposure to Greek debt and other toxic assets such as US mortgage-backed securities. Dexia, which accepted a state-led breakup and the nationalization of its Belgian banking arm in October, and is now little more than a holding of bonds in runoff, booked a 3.4 billion euro loss on its holding of Greek sovereign bonds. French investment bank Natixis, rescued from near-collapse during the 2008 financial crisis by a government-backed merger of its retail cooperative parents, reported a milder-than-expected 32 percent decline in quarterly profits.
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Source : english.sabah.com.tr
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