ECB should treat euro zones banks individually, accept differences - Constancio

MADRID (Reuters) - The European Central Bank has to study euro zone banks individually and accept that there can be differences between the health of institutions, Vice President Vitor Constancio said on Thursday when asked about the Italian banking sector.

"The supervisor has to accept what is credible, and what is credible may be different from institution to institution," he told an audience in Madrid.

Italy is in talks with the European Commission to arrange assistance for banks' recapitalization without breaching EU rules on state bailouts. European authorities have indicated a way forward for Rome to protect Italian retail investors while still abiding by EU rules against state-funded bank bailouts.

Constancio also said there was lack of harmonization at a national level between banks in the euro zone which posed difficulties to their operation within the single supervisory mechanism.

(Reporting by Angus Berwick; Editing by Jesus Aguado)