FRANKFURT (Reuters) - The European Central Bank should use its power to restructure 'zombie banks' which are burdened by excessive amounts of bad loans, Bundesbank board member Andreas Dombret said on Monday.
"There are still many zombie banks that are kept alive for political reasons," Dombret told a banking conference, singling out Italy as the most problematic country in view of the high level of bad loans at its banks.
"The Single Supervisory Mechanism and the Single Resolution Mechansim have to assert their power to use the new bail-in regime in order to restructure a stressed credit institution or ultimately wind down virtually insolvent banks," he added, calling on the ECB to use its 'early intervention' powers on banks that are at risk of failing.