“Continued Inertia” – Bank Tremors: ECB Threatens With Tighter Surveillance

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Andrea Enria, the ECB’s Chief Banking Supervisor, believes that the recent turbulence in the banking sector demonstrates the need for strict supervision. “We also stand ready to step up our interventions in other areas where we see continued sluggishness in bank response,” said Enria.

“I want to emphasize again that being more risk-oriented does not mean less involvement,” Enria said in Frankfurt on Tuesday. On the contrary, regulators increasingly value structured escalation when banks fall behind clearly defined timeframes.

Dangerous increase in risk
An example is the company with loans to highly indebted companies (leveraged finance). There, regulators acted against a dangerous increase in risk and the complacency of some banks.

The ECB currently supervises 111 institutions
“We also stand ready to step up our interventions in other areas where we see continued sluggishness in bank response,” said Enria. In doing so, the regulator uses the entire range of available enforcement and sanction measures. The European Central Bank (ECB) supervises the major banks in the euro area. There are currently 111 institutes.

Source: Krone

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