FRANKFURT (Reuters) - Europe's banking sector is bloated and takes at least as much out of the economy as it adds, academic advisers to Europe's early warning financial risk body said in a report published on Monday.
"According to all indicators, our patient is abnormally heavy", the academics wrote in the 50-page report, entitled "Is Europe Overbanked?", in which they set out a suite of policy options to shape up the sector.
The academics, whose suggestions included increasing minimum capital requirements, wrote the report for the European Systemic Risk Board (ESRB) - a body designed to give early warnings and one of Europe's flagship responses to the financial crisis.
"The European banking system has reached a size where its marginal contribution to real economic growth is likely to be nil or negative," the academics, led by Marco Pagano, wrote in the report.
The ESRB is hosted and supported by the European Central Bank, though the ECB and the new single supervisory mechanism