FRANKFURT (Reuters) -The European Central Bank (ECB) this year imposed additional capital requirements on 13 euro zone banks at risk of excessive leverage.
This “supplement” to the bank leverage ratio requirement, which measures a bank’s core capital as a percentage of its total assets, was applied to twice as many banks as last year and represented between 10 and 40 basis points.
This is the most notable fact in the ECB’s annual assessment of the 113 banks under its supervision, which it judged overall to be well endowed with capital and liquidity.
“On average, banks have maintained strong capital and liquidity positions, well beyond regulatory requirements,” the ECB said.
Nonetheless, the ECB imposed new capital requirements on 18 banks that it said had not made sufficient provisions for defaulted loans, up from 20 last year.
Nine banks were subject to additional requirements due to their exposure to “leveraged financing”. The ECB did not mention any banking groups, in accordance with its policy.
Next year, the institution will focus its monitoring work on risks linked to geopolitical changes, including the risks of cyberattacks and financial sanctions, and a less dynamic economy.
“The weakening macroeconomic outlook and structural changes in the economy call for increased vigilance,” the ECB said in a press release.
“Adverse geopolitical events are often not taken into account by financial markets, which can lead to an abrupt reassessment of risks if such events materialize,” said Claudia Buch, who heads the ECB supervisory authority. .
“As for the real economy, increased costs for businesses and disruptions to global trade could increase credit risk,” she added.
(Written by Francesco Canepa, French version Bertrand De Meyer, edited by Blandine Hénault)
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