ECB's Draghi Spurs Hopes Of Public Money To Rescue Banks

European banks rose on Thursday after European Central Bank President Mario Draghi suggested using public money to tackle the level of bad loans in the eurozone banking system. The Stoxx Europe 600 banks index jumped 0.6% after trading with losses earlier in the day. Speaking at the ECB's monetary policy news conference Draghi said a public backstop for non-performing loans would be "very useful," but it should be agreed with the European Commission. Draghi also warned the level of bank loans is problem a for future profitability and bank lending. "We want to avoid fire sales," he said. The comments come after concerns have risen in recent weeks that the level of bad loans at Italy's banks could blow up the country's financial system and threaten its membership in the eurozone. Italian banks are neck-deep in non-performing loans, with official data putting the total at around 200 billion ($220.5 billion), or around 8% of total loans. The issues have been reflected in Italian bank shares, with focus particularly on Siena-based Banca Monte dei Paschi , which is down 74% so far this year. The European Central Bank earlier this month asked BMPS to cut its gross nonperforming loan exposur to €14.6 billion by 2018 from €46.9 billion in 2015.