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Banks do not ignore the potential financial crisis in lending markets and may expect higher capital prices, a European Central Bank official has warned.
Andrea Enria said on Friday that she was concerned about “market dissatisfaction and risk” with banks, adding that there were “indications of overcrowding, economic instability and a lack of resources leading to risky risks”.
ECB officials say the comments show that the regulator has become disillusioned with several euro lenders, such as Deutsche Bank, who have been refusing. his calling in order to be able to borrow risky loans.
“Where we see flaws, we will have the responsibility to manage them,” Enria told an online interview for graduates of economics and economics at the University of Naples.
“In key areas such as grants, where the management guidelines have not been fully implemented by banks, we plan to use all the management tools available to us, including the equivalent of each bank, should this be necessary,” he said.
The ECB chief executive said earlier this week that it would happen bring up the cup on the shares that banks share and share later this year. On Friday, he said, “banks are still” confident “when” uncertainty has diminished and, by all indications, the financial system is well on its way to recovery “. The ECB is due to announce the results of its banking test on July 30.
However, despite his preconceived notions, Enria said: “Real indications of an increase in risk have emerged in the categories of items with the highest interest rates received, which encourage oversight.”
The massive assistance provided by governments and central banks has protected the financial system from being hit by the coronavirus, he said.
But he said this would reduce the risk of public concern and warn of the risk of “sudden price fixes” when aid is withdrawn, especially “if investors expect inflationary pressures to continue and change their expectations about inflation”.
“The reorganization that has taken place as a result of the disaster will also reflect the entire non-bank environment as well as the costs incurred due to the redemption of investors and the loss of credit and accounting,” he added.
US Federal Reserve warned in May that some economic estimates are “high compared to the old ones” and “could be at risk of a significant decline should be at risk of starvation”.
Although the ECB has been calling for banks to repay their debts since 2017 – the task of paying off sects and other corporate buyers – Enria said it has seen “some decline in registration rates” by banks operating in the region.
In the fourth quarter of 2020, he said that more than half of the loans these banks paid were the same as six times the pre-interest rates, taxes, lower rates and interest deductions and was a pact-lite – to protect the sellers – or was no agreements at all.
Last year, Deutsche Bank he refuses The ECB’s call for a halt to major economic developments is due to concerns over poor governance in the region, which is one of Europe’s leading lenders. Deutsche declined to comment Friday.
Enria also expressed concern at the fact that banks were “unconcerned” with the loss of risk in the 15tn euro market market that allows investors to bet on the stock market.
He also said the risks in the market were exacerbated by the collapse of the Bill Hwang family office in Archegos in March, which left some banks with “extreme methods” of nursing. losses. Credit Suisse lost $ 5bn on loan to Archegos and Nomura lost $ 3bn.
Commenting on the “growing problem of shadow banks and the proliferation of connections in financial markets,” Enria said “it is important to reorganize global monitoring and oversight negotiations, as new solutions may be needed”.
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