[author: Javier Gutierrez]
Despite the occasional operational issue, European banks; like their peers in Asia, the US, and the UK, are generally in good financial shape to weather the current economic storms reverberating around the world. This picture is reflected in the recent Annual Risk Assessment published by the European Banking Authority (EBA).
The UK’s Prudential Regulatory Authority (PRA) regulations in this area – SS1/21 and SS2/21 – come into effect in March 2022. The influence of these regulations covers institutions themselves and the third parties they use to deliver their services. Plans are in development to extend the provisions of Operational Resilience to creating a register of incidents, the third-party arrangements themselves, and potentially even attempt to regulate the most important third-party suppliers as well.
While challenges remain – with continued low-interest rates, slow economic growth combined with inflationary pressures, and the impact of Brexit on the European banking system being just a selection – the picture painted by the survey is that EU banks have strong balance sheets. They have good liquidity reserves…
