Banks need to clear toxic assets - Darling

LONDON (Reuters) - Chancellor Alistair Darling will press his G8 colleagues this weekend to speed up clearing up toxic assets from their banks' balance sheets.

Darling will travel to Lecce, southern Italy, on Friday for a meeting of finance ministers from the Group of Eight rich nations where the policymakers are expected to take stock of the global economy and recent signs of recovery.

But Treasury officials said Darling is expected to remain cautious on the prospects of recovery and stress the need to make faster progress on freeing up banks' balance sheets and getting them lending again.

"If you don't fix the banking problem, you'll never fix the wider economy," Darling was quoted as saying in an interview in Friday's edition of the Financial Times.

The paper said Darling was clear that the IMF's analysis was correct that "there was still more to be done in terms of European banks."

Treasury officials said he will also call on colleagues to make good on pledges they made at the G20 summit in London to deliver more money for the International Monetary Fund. In particular, Germany and Italy had still not made their bilateral commitments to the IMF clear.

On the economy, Darling will strike a cautious note despite recent signs that the British economy is over the worst of the recession.

"I think it is important that people should not become complacent," he was quoted as saying in the FT.

In particular, he was concerned that the rising price of oil, which has doubled since the end of 2008, could hamper the prospects of economic recovery.

Treasury officials say Darling will tell the G8 that there needs to be a shared consensus that it is in no country's interests to allow oil prices to impede a global upturn.