Europe’s Banks Are Stronger, but Some May Not Weather Crisis, Regulator Says
By Patricia Kowsmann
May 25, 2020, The Wall Street Journal
Europe’s banks have built enough buffers to face the effects of the coronavirus pandemic, but not all will be able to weather a sharp fall in profitability as loans turn sour and the cost of raising funds rises, a banking regulator said Monday.
In its first assessment of the effects of the coronavirus in the sector, the Paris-based European Banking Authority said banks have much more capital set aside to absorb losses than they did ahead of the financial crisis. But they are also more exposed to small and medium-size companies and consumer credit, two areas that provide higher margins in a low-interest-rate environment but that are now hard-hit by the virus outbreak.
