ECB risk management guidance | Image:Republic
Eurozone banking challenges: Eurozone banks are facing a paradigm shift in risk management as they navigate the end of ultra-low interest rates and contend with new competitors, cautioned the European Central Bank’s (ECB) chief supervisor.
In a statement on Thursday, Claudia Buch, the ECB’s top bank supervisor, highlighted the need for Eurozone banks to recalibrate their risk management strategies in response to emerging challenges. These challenges range from heightened inflation and interest rates to the rise of non-traditional competitors capable of swiftly seizing market share.
While Eurozone banks demonstrated resilience in handling recent economic fluctuations, including inflationary pressures and interest rate hikes, Buch warned against complacency. Despite the apparent ease with which banks weathered last year’s banking turbulence in the United States and Switzerland, Buch emphasized the importance of preparing for potentially tougher times ahead.
Buch acknowledged that loan losses have remained unusually low, despite operating within an environment teetering on the brink of recession. However, she cautioned that this resilience could be…
