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Covid-19: corporate debt, a threat to banks

2020-06-25T00:07:06.720Z


An increase in defaults could induce an increase in bad debts in their balance sheets.With the Covid-19 crisis, the risks to the financial system have greatly increased. And all are now potentially systemic underlines the quarterly financial risk assessment report published Tuesday by the Banque de France. The increase in household and especially corporate debt is at the top of concerns. "This is the risk that we consider the greatest , " explains Sylvie Goulard, the deputy governo...


With the Covid-19 crisis, the risks to the financial system have greatly increased. And all are now potentially systemic underlines the quarterly financial risk assessment report published Tuesday by the Banque de France. The increase in household and especially corporate debt is at the top of concerns. "This is the risk that we consider the greatest , " explains Sylvie Goulard, the deputy governor of the Banque de France. Faced with a drying up of their revenues during the containment period, companies, whose debt stock was already high, had a massive use of State Guaranteed Loans (PGE) to keep their cash flow afloat. To date, they have already asked for more than 110 billion euros.

Read also: Banque de France calls for bank mergers

However, the increase in indebtedness "is likely to degrade the solvency of a number of companies" , points out the institution. This risk would be heightened in the event of a recovery in the “sluggish” economy and a deterioration in their

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Source: lefigaro

All business articles on 2020-06-25

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