Some banks must be left fail, says ECB

The European Central Bank’s willingness to let lenders fail will depend on the funds available to wind them down, analysts said, after the new head of banking supervision said some should go out of business.

Daniele Nouy, chair of the supervisory board of the ECB’s regulatory arm, told the Financial Times it’s necessary to accept that some banks “have no future,” and authorities must “let some disappear in an orderly fashion and not try to merge them with other institutions.”

Her comments come as the ECB carries out a three-stage assessment of bank balance sheets, culminating in a stress test, before taking over as supervisor in November.