Banks' funding risks 'a key vulnerability'

Europe's banks remain exposed to funding and liquidity risks, and the level of risk attached to loans in some countries is as high as at the time of the collapse of American investment bank Lehman Brothers in 2008, the European Central Bank said yesterday.

The ECB's Financial Stability Report said that despite the improvement in funding in the first few months of 2011, "banks' funding risks remain among the key vulnerabilities confronting the euro area banking sector". The ECB said the environment for banks remained "difficult".

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