11/9/2021, 2:14 PM (Source: TeleTrader)
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Pandemic could threaten asset quality - Lagarde

European Central Bank (ECB) President Christine Lagarde said on Tuesday that banks will need to address the consequences of the coronavirus pandemic for asset quality in the long term. "The full impact of the pandemic will become visible only gradually, which poses challenges for the management of credit risk. Public support and regulatory measures may have blurred the underlying creditworthiness of borrowers. As those measures are lifted and the true financial health of companies comes to light, asset quality could be affected," she stated.

Lagarde estimated that it is too early to predict the trajectory of asset quality, as "the ultimate impact on non-performing loans will only occur with a delay of several years and will crucially depend on the strength of the recovery." She cautioned banks "should have robust risk controls in place to be alert to these risks and address them early on."

Baha Breaking News (BBN) / DJ