Bank supervision: Out of the billions

the banks of the Corona-crisis are too cautious in lending, complained of some entrepreneurs. Increasingly louder, a rather unusual position, more output for jo

Bank supervision: Out of the billions

the banks of the Corona-crisis are too cautious in lending, complained of some entrepreneurs. Increasingly louder, a rather unusual position, more output for joy, the banks – namely, the banking supervision of the European Central Bank (ECB) is now penetrating, however. "We see a great reluctance on the part of banks to use their capital and liquidity buffers," said the head of the banking Supervisory authority, Andrea Enria, on Tuesday in a press conference. This capital buffer is in place to be in times of crisis used. "In this crisis, the banks are not the trigger of the shocks, but must function as a shock absorber."

Tim Kanning

editor in the economy.

F. A. Z.

It is currently a lot of talks with bankers to the issue. Many indicated that they were afraid of the reactions in the markets and rating agencies, if you antasteten their capital reserves for lending. The EU have relaxed the Commission and the Supervisory authorities temporarily extra some requirements so that the banks can make more loans and in this way, the economy is in crisis support. By these relaxations, the European banks should be able to forgive several hundred billion euros in loans.

A drag but it is not obvious that the banks know how long this exception should apply rules and how quickly your buffer then rebuild. His authority to work here even in the summer, an "Exit scenario" to show, said Enria. Because of the large uncertainties as to the further course of the pandemic and its economic impact but that would be difficult. You will not insist that the banks must quickly return back to their initial capital ratios.

capital requirements to the test

The onset of the recession was the first test for the new capital requirements set out in the financial and the sovereign debt crisis. He's not advertising at the moment only to banks for lending even more to this buffer access. Also, rating agencies and market analysts would have to be convinced that it is not interpreted as a sign of weakness, if banks do this. He does not think that the capital buffers of European banks continue to be sufficient to be able to a greater number of loan default to cope with – at least as long as the second virus wave sequence. Even in the case of the supply of fresh capital, he currently sees no difficulties, finally, recently, some banks have issued bonds without having to exceptionally bad conditions to accept.

Enria suggested, however, that even his authority would work to ensure that the banks should pay out over a longer period, no dividends. So far, the ECB supervision had imposed a Moratorium until the beginning of October. On Monday night, the ECB Chief Christine Lagarde led the European Committee had suggested for systemic risk Board (ESRB), that the banks should be avoided until at least the end of the year on the payment of dividends, payments of bonuses as well as share repurchases. The stance of the ECB's supervision and it should be up in mid-July, more clarity, said Enria.

Updated Date: 17 June 2020, 09:21

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