The Limited Times

Now you can see non-English news...

European financial regulators worried about the evolution of the pandemic

2021-03-31T15:11:01.203Z


European financial supervisors said on Tuesday they were worried about the risks posed to the banking and financial system by the acceleration of the pandemic on the Old Continent. Read also: The banking sector under pressure after massive sales of the Archegos hedge fund " The resurgence of the Covid-19 pandemic since the last quarter of 2020 has generated an increase in economic uncertainty ",


European financial supervisors said on Tuesday they were worried about the risks posed to the banking and financial system by the acceleration of the pandemic on the Old Continent.

Read also: The banking sector under pressure after massive sales of the Archegos hedge fund

"

The resurgence of the Covid-19 pandemic since the last quarter of 2020 has generated an increase in economic uncertainty

", warn in a joint report the European Banking Authority (EBA), the Financial Markets Authority (ESMA) and the Insurance Authority (EIOPA).

"

The start of the deployment of vaccinations is a crucial horizon for medium-term expectations, but insufficient production capacities, delays in deliveries as well as the risks associated with mutations in the virus are weighing heavily on the prospects for recovery in the short term. term,

”they stressed.

A significant increase in credit risk

According to them, "

macroeconomic uncertainty is generally not reflected in asset prices

", and a new financial shock cannot be ruled out.

Therefore, supervisors advise to prepare for a deterioration in some assets and to continue to take actions to cope with a low interest rate environment that is likely to last.

They also advise prudence in the payment of dividends and in share buyback transactions.

Earlier in the day, the EBA was also worried about "

a significant increase in credit risk

", especially in the sectors most affected by the crisis.

The authority also noted an erosion of the return on equity of European banking institutions, from 2.5% in the third quarter to 2% in the fourth.

"

The increase in income net of fees and commissions should not offset the decline in net interest income

," stressed the EBA.

The European banking sector has been confronted for years with a very low interest rate environment which weighs on its profitability, in particular compared to American banks which have - among other things - a larger domestic market.

Read also: Hushed battle over finance between Europe and the City

"

Deteriorating asset quality and uncertainty about the recovery could keep the cost of risk high, as strong competition continues to add pressure on interest margins and commission income.

" , she warned.

The health situation remains worrying in Europe, and in particular in France where Emmanuel Macron is due to speak Wednesday evening to announce possible new measures.

Source: lefigaro

All business articles on 2021-03-31

You may like

Life/Entertain 2024-03-28T12:55:11.959Z

Trends 24h

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.