FRANKFURT (Reuters) – Euro zone banks must adapt their risk management to face the challenges of the end of ultra-low interest rates and a changing competitive landscape, the bank’s Supervisory Board said on Thursday European Central (ECB).
Banks in the euro zone have easily coped with the drastic rise in interest rates since 2022 and were little affected by the turbulence that affected the sector last year in the United States and Switzerland. This fuels the risk of complacency and fuels calls to prepare for tougher times.
Provisions for bad loans remained exceptionally low, despite a near-recession environment, but that may be due to unprecedented fiscal and monetary support that protected banks from shocks, Claudia Buch, the authority’s president, said on Thursday. banking supervision of the ECB.
“Future risk assessments will need to take this into account, as past loan default data does not provide an accurate representation of future risks to asset quality,” she added in the Board of Trustees’ annual report. prudential supervision.
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Banks also need to better prepare for risks from cyberattacks, climate change and geopolitical upheaval, which could fundamentally alter their long-term business model.
“Banks must therefore imperatively adapt their risk management practices to the new environment,” believes Claudia Buch.
Innovation, particularly in terms of artificial intelligence, facilitates the development of non-bank financial institutions which could threaten the margins of traditional banks and push them to take excessive risks.
“Innovation and increased competition can improve economic well-being, but they also bring new risks,” emphasizes Claudia Buch.
(Reporting by Balazs Koranyi, Blandine Hénault for the French version, editing by Kate Entringer)
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