EU's Barroso urges urgent action to revive banks

(BRUSSELS) - European Commission chief Jose Manuel Barroso called on Tuesday for urgent action to clean up banks' balance sheets amid mounting concerns over rising credit losses in Europe.

"It is ... vital that we accelerate action on impaired assets on banks' balance sheets," Barroso told a conference in Brussels.

"Only a few member states have started to deal with this issue. More action is vital if we are going to get credit, the lifeblood of our economies, flowing again."

The European Central Bank warned on Monday that eurozone banks might have to take another 283 billion dollars (204 billion euros) in writedowns by the end of 2010, mainly to cover risky loans.

Credit rating agency Standard and Poor's warned on Tuesday that more than half of Europe's biggest banks faced the prospect of a downgrade as they struggle to shoulder mounting credit losses.

"Significantly higher credit losses will characterize the second phase of the downturn of the European, and global, banking industry," S and P said in an industry-wide report.

"Our outlooks are negative on the credit ratings of more than half of the largest banking groups in Europe due to our assessment that they have poor earnings prospects and that industry fundamentals have weakened."