Report: European banks to struggle, may need to cut costs

FRANKFURT, Germany (AP) — European banks are likely to struggle to make profits in months ahead and may need to cut costs, merge or change their business strategies to return to solid health, the European Central Bank said Tuesday.

In its review of financial stability in the currency union, the ECB said the region's banking system had weathered volatility in markets at the start of the year, and remained stable.

Bank earnings are under pressure from new regulations forcing them to set aside bigger capital cushions and reduce risky activities such as trading securities and derivatives to avoid another financial crisis.

Many are also paying fines and legal settlements connected to past misconduct over sales of risky financial products or rigging financial benchmarks.