ECB calls for national bad banks

The European Central Bank's vice president called on Friday for the creation of government-backed bad banks to help buy some of the 1 trillion euros in unpaid loans that have weighed on eurozone banks since the financial crisis.

With lenders in Italy and other weaker economies struggling to find buyers for their bad credit, Vitor Constancio called for a European Union "blueprint" for creating asset management companies (AMC) compliant with EU rules against bailouts.

Less than a week ago, Germany shot down a proposal by the European Banking Authority to create an EU-wide bad bank on the grounds that bad loans are concentrated in just a few countries, such as Italy, Cyprus and Portugal.

"A true European AMC, however, faces difficulties in the present environment," Constancio said at an event in Brussels.

"In more immediate terms, a way forward could be the...