Europe’s economy will not be firing on all cylinders until its banking sector has resolved ongoing problems with non-performing loans (NPLs), according to the CEO of a major European bank.

Speaking at the World Economic Forum (WEF) in Davos, Switzerland, ING chief executive Ralph Hamers told CNBC on Wednesday: “Some of them are still soul-searching. Until that is really over I think that we are not really there and banks will not be the real push for economic growth.”

NPLs have been a burden for banks — most notably in the European Union‘s southern countries — since the global financial crisis, as businesses struggle to pay back their debt.

The process of reducing the holdings of NPLs among those same banks is widely seen as integral to boosting economic strength in Europe. It would also likely help complete a banking union, the bloc’s flagship project to protect itself against future financial crises.

When asked what he believed was a priority for the European banking sector at present, Hamers replied: “We really have to finish the European banking union.”

Source: cnbc
European banks must stop 'soul searching' and fix ongoing problems, ING CEO says