Brussels, 07/05/2014 (Agence Europe) - On Tuesday 6 May, the European Banking Authority (EBA) published the first quarterly risk scoreboard for 2014, summarising risks and vulnerabilities in the banking sector in Europe.
Based on data from the third quarter of 2013 for 55 banks, the scoreboard shows that European banks' capital positions decreased as a result of the cleaning-up of balance sheets and payment of legal fees. This decrease of capital positions was outpaced by declining risk-weighted assets (RWAs), thus contributing to higher capital ratios. The EBA notes in a press release: “Profitability levels have also been severely affected by the clean-up of some major banks in preparation to the Asset Quality Review (AQR) and Stress Test, and continued to be subdued. Generally, such a low margins environment is expected to persist”. The EBA explains in the final quarter of 2013, weighted average of debt-to-equity ratio fell to the lowest level in four years. Loan-to-deposit ratio declined significantly, also reaching the lowest level in four years. (MB)