"Banks in the 16-nation eurozone face $283 billion of further losses this year and next as the recession forces them to write off bad loans, the European Central Bank (ECB) warned Monday [in its Financial Stability Report]. The warning, which helped push down the euro against the dollar, came just hours before Moody's downgraded 30 Spanish banks and cajas, citing the worsening quality of their loans and the struggling Spanish economy...." [Financial Times/Factiva]

Reuters adds that "...losses in emerging Europe could get even worse if global risk aversion put more pressure on their currencies because hard currency loans are popular with consumers in several countries -- notably in the Baltic states, Romania, Hungary and Poland. 'This could, in turn, lead to an aggravation of the economic downturn in central and eastern Europe, as some western banks with local subsidiaries may endeavor to reduce their risk exposure to the region,' the ECB said...." [Reuters/Factiva]

The WSJ writes that "...still, the ECB estimates the crisis won't be as hard on euro-zone banks as the International Monetary Fund has predicted. Since the IMF published its forecasts in April, many European policy makers have said the figures don't take into account how European accounting and leverage standards differ from those in the US...." [The Wall Street Journal/Factiva]