The EU must replace “unsustainable, overleveraged structures with simpler, less leveraged, more prudent and more transparent forms of banking,” she said.

Kroes, who reviews whether government aid harms competition, is waiting for restructuring plans for several dozen lenders, including the UK’s Northern Rock Plc, that received government loan guarantees and capital injections in the past six months. On Friday, the European Commission said it had doubts about the “viability” of restructuring plans for Dexia SA, the world’s largest lender to local governments.

“We are aiming to clear balance sheets, either through restructuring or winding down of banks, so that the survivors have the best chance of a healthy future,” Kroes said. “This is the clearest path to stability in the sector, more lending to the real economy and a return to economic growth.”

Kroes said she would welcome “new ideas” for cross-border banks, rather than governments’ plans that focus on national markets.

Kroes has approved government debt guarantee plans for several countries, including Belgian support for Fortis, and Germany’s recapitalization and restructuring program for Bayerische Landesbank, the country’s second-biggest state-owned bank.

Source: Bloomberg