Eurozone told back fund to shut zombie banks

Eurozone countries must prepare to shut their failing “zombie” banks and quickly pool the money to do it, the bloc’s top regulator said yesterday, ahead of a warts-and-all investigation of its still-fragile financial system.

Daniele Nouy’s comments, including her plea for countries to form a united front in solving the problem, give an early indication of how the bloc’s chief banking supervisor intends to tackle issues that show up in health checks this year.

They may also influence talks between European lawmakers to finalise the second pillar of banking union — the launch of an agency to close bad banks and a fund to help cover the costs. This would go hand-in-hand with European Central Bank supervision of the sector.