Europe Economy

Deleveraging to Go On Until Euro Action: BarCap Co-CEO

Banks around the world will continue to reduce their exposure to peripheral euro zone economies until there is a more definitive solution to the debt crisis, Rich Ricci, co-chief executive of Barclays Capital, told CNBC Thursday.

Photo: Bloomberg | Getty Imgaes

"In the industry, you're going to see that continued deleveraging until we get some action," he warned.

"The market realizes this isn't a problem that is going to be solved overnight, but what they want is a clear path to some sort of solution and we don't have that yet. We don't have it at all and it's very, very frustrating for market participants as well as markets generally."

Barclays held around 8 billion pounds ($12.6 billion) worth of exposure to Spain, Italy, Portugal and Greece at the end of the third quarter, down around 31 percent from the end of the previous quarter.

After weeks of worries about Greece and Italy, market attention is now turning to Spain. Even France, the euro zone's second-largest economy, has seen bond yields shoot up over worries about its banking system's exposure to the euro zone crisis.

"It felt like there was a comprehensive solution coming, but that has kind of withered away in the politics and the complexities of Europe," said Ricci, reportedly the best-paid banker in London last year.

"There's a lot of good intentions, but not enough detail for markets to get their head around what's going to happen."

Divisions between Germany and France over the role the European Central Bank (ECB) should play in sorting out the crisis have also emerged, with French President Nicolas Sarkozy in favor of greater intervention from the ECB and German Chancellor Angela Merkel repeatedly stating that this would be against the rules of the European Union.

"It's a large group of people who have some responsibility for this," said Ricci.

"The complexities of how the euro was created don't make it easy. Political challenges in various countries make it very difficult. Market participants have been frustrated and bear some responsibility in terms of how we got here."

"There's plenty of blame to go around, but what we need to do is put the blame aside and act in the interests of the euro zone and the world," he added.