If European banks are solid, they must prepare for increasing uncertainty linked to the possible consequences of the trade war on the economy, explains Claudia Buch, president of the prudential supervisory board of the European Central Bank (ECB). It insists on the importance of strong regulation, essential to better face crises.
How is the European banking sector, in an uncertain context for the economy and marked by multiple tensions?
The financial situation of the banks is good: they are well capitalized, their profitability has benefited from the rise in interest rates. But the overall context in which they operate is difficult, as we noticed in early April during the very strong reaction of the announcements to the announcements [du président américain, Donald Trump] on customs duties. This underlines how much the external environment can change quickly.
Banks have managed the situation well so far, but the economic impact of customs duties has not yet materialized: what will be the consequences on credit risk, on the real economy? It will take time to have clear answers. Geopolitical risk is one of the main factors of uncertainty for which banks must prepare.
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Source: Lemonde