In the current circumstances it is necessary that (the banks, ed.) Be very careful about their budgets “ and to the entities to which they have granted credit “because it is clear that in some sectors there will be bankruptcies and it will take time to get back from difficulty”. After all, for credit institutions “Act sensibly it is also in their interest ”.
The President of the ECB said yesterday, Christine Lagarde, during the annual forum in Sintra, Portugal, bringing back what for many is one time bomb ready to to blow up.
The rise of impaired loans (Npl) “It will require provisions and it is in the sector’s interest to act sensibly so that there is no NPL shock”. “I must say” Lagarde continued “that the budgetary measures implemented, such as moratoriums and public guarantee schemes, have been a great shield, but at a certain point they will have to be removed ”.
BAD BANK HYPOTHESIS – A bad bank europea that effectively disposes of the banks’ non-performing loans, which they risk a surge with the pandemic crisisto. Or – Plan B – a European network of national band banks, that if well prepared, and with strict conditionalities, it would still be able to support the sector equally in the various economies. This is the proposal reworked and relaunched, at the end of October, by the number one of the ECB Banking Supervision, Andrea Enria, in an article on the Financial Times entitled “On the quality of bank assets this time we have to do better”.
By “better” Enria means “faster” because “12 years after the bankruptcy of Lehman Brothers and nine years after the first involvement of the private sector in the Greek debt crisis – he writes – the quality of bank assets in the euro area has not yet returned to levels pre-crisi “.
In the text of his introductory speech to the hearing in the European Parliament, Enria noted that “the levels of non-performing loans in the major European banks fell in the second quarter of the year, to 2.94% from 3.22% at which they stood at end 2029 “however we expect an increase in exposure to NPL, in particular when public support measures, such as payment moratoriums, expire ”. “In most banks – he adds – we already see the increase in cost of risk “.
In recent hours, the words of the Vice President of the European Central Bank have also arrived, Luis de Guindos, that in stressing that the crisis requires bold new steps on banks and stock exchanges, it has pushed for greater political will to complete the banking and capital markets union. In the past crisis in Europe they were made “Important steps to make the system more resilient. In the face of a new major crisis we must take more bold steps, ”said de Guindos, speaking online at the annual conference on financial regulation of the Cirsf (Research Center on Regulation and Supervision of the Financial Sector).
We need to “complete the Banking Union and fulfill our commitment to build a true union of capital markets,” he said. It will take ambition and commitment, “But the price of inaction is too high”, he reiterated, specifying that the completion of the banking union is one of the main priorities.
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