Eight years after the 2008 financial crisis, European banks remain in trouble as their balance sheets continue to feature a high level of non-performing loans, Steve Eisman, the hedge fund manager who famously predicted the crash,has told the U.K.'s Guardian newspaper.
The state of Italian banks is one of the main problems, but the German lender Deutsche Bank, which is seen as one of the most important institutions in Europe, also raises concerns, Eisman added.
"Europe is screwed. You guys are still screwed," Eisman told the newspaper in an interview published over the weekend.
"In the Italian system, the banks say they are worth 45-50 cents in the dollar. But the bid price is 20 cents. If they were to mark them down, they would be insolvent," he added.
Italian banking stocks have been under pressure for months. Last week, the Italian banking index dropped as much as 4.2 percent to the lowest level since early October, according to Reuters, with investors worried over the upcoming constitutional referendum.
Monte dei Paschi di Siena, the world's oldest bank, was singled out in stress tests conducted by the European Banking Authority earlier this year. The institution indicated it was the lender with the least capacity to sustain any potential economic shocks. Unicredit, another Italian lender, was also among the 10 of 51 borrowers with the shortest capital ratio.