European Union moves to shore up ailing banks moved into higher gear on Thursday as US President Barack Obama urged European leaders to act faster to tackle a sovereign debt crisis that threatens global economic recovery.
The EU?s executive arm said it would present a plan for member states to coordinate a recapitalisation of their banks, as regulators met in London to reassess the capital buffers of stressed lenders that received a clean bill of health in July.
The European Central Bank threw a lifeline to commercial banks by turning up its liquidity pumps to provide longer-term cheap money for the growing number of European lenders which have seen wholesale funding dry up as market confidence ebbs.
The moves came amid fears that Greece may default within months, setting off a chain reaction of sovereign downgrades and bank failures.
?We are now proposing member states to have a coordinated action to recapitalise banks and so to get rid of toxic assets they may have,? said European Commission president Jose Manuel Barroso.
European banks are planning to sell more than 30 billion euros ($40 billion) of assets as the debt crisis increases the need to raise capital, according KPMG.
European lenders are accelerating asset sales after disposing of more than 26 billion euros of loans this year, according to a KPMG study released today.
In Washington, Obama said uncertainty about the euro zone crisis was hitting global markets and posed the biggest headwind to the US economy. He said he hoped European leaders would have a concrete plan in time for a November G20 summit to overcome the debt crisis.