Some banks in Europe may not withstand - the European regulator warned

[Sergey Golubev]

Some banks in Europe may not withstand - the European regulator warned

The European Banking Authority (EBA) stated the lenders are more exposed to smaller companies and consumer credit — areas hit hard by coronavirus pandemic. Europe’s banks have built enough buffers to face the effects of the coronavirus pandemic but not all will be able to weather a sharp fall in profitability as loans turn sour and the cost of raising funds rises.

The EBA said based on a sensitive analysis of 117 banks in the European Union, the impact of credit-risk losses on their key capital-buffer ratio — known as CET1 — could be as much as a combined €315bn. Still, banks would hold, on average, a capital buffer of about 1.1 percentage points above the overall capital requirement.

“There could be weaker banks, including those that entered the crisis with existing idiosyncratic problems or those heavily exposed to the sectors more affected by the crisis, and whose capital ratios might not suffice to weather the upcoming challenges,” EBA warned.

based on the source..