Reducing bad loans:ezb urges banks to make progress

Reducing bad loans:ezb urges banks to make progress

The stock of non-performing loans (npls) "remains high at many institutions and this may ultimately have a negative impact on banks’ lending to the economy," the ECB’s banking supervisor noted.

Southern europe’s banks, in particular, have had to struggle with defaulting loan installments to the very end.

In principle, the european central bank (ECB) considers eurozone banks to be resilient and stable. An unnamed money house, however, failed the examination of the capital requirements. This is the result of the ECB’s regular supervisory review and evaluation process (srep).

Supervisors set individual capital surcharges for banks – depending on risk. On average, the capital requirements this year were 10.6 percent, compared to 10.4 percent last year.

Starting next spring, europe’s banks will again have to face a rough crisis test: in parallel stress tests, the european banking authority (EBA) and the european central bank (ECB) will put the institutions under the microscope. The results are to be published at the beginning of november. Since november 2014, the ECB has been directly supervising the largest banking groups in the euro zone, currently 119 institutions.

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