ECB Encourages Banks to Adjust Their Risk Management Protocols [Video]

The European Central Bank’s top supervisor stated that eurozone banks must change their risk management strategies as they confront difficulties ranging from the end of ultra-low interest rates to the advent of non-traditional competitors who can quickly take market share.

Eurozone banks handled the recent spike in inflation and interest rates with remarkable ease, notably avoiding last year’s banking upheaval in the United States and Switzerland, heightening the risk of complacency and fueling calls for lenders to prepare for more challenging times.

Loan losses have been extremely low despite a near-recessionary climate, but this could be attributed to the historic fiscal and monetary support that has sheltered banks from shocks, according to Claudia Buch, the ECB’s top bank regulator, on Thursday.

“This has implications for future risk assessments, as past data on loan defaults do not truly reflect the risks to asset quality that lay ahead,” Buch said in the …