Brussels, 26/06/2014 (Agence Europe) - On Wednesday 25 June, the European Banking Authority (EBA) expressed concern at the high level of non-performing bank loans in Europe.
“The quality of some banks' loan portfolios continued to decline in 2013 and the first months of 2014 and remains a concern across the EU, pointing to the need for rigorous asset quality reviews. The ratio of impaired and past due (>90 days) loans to total loans increased slightly from 6.7 % in June 2013 to 6.8 % in December 2013 (the highest since 2009)”, says the EBA in its fifth six-monthly review on risks and vulnerabilities in the European bank sector.
The EBA goes on to note: “Throughout the first half of 2014, the EU banking sector continued to observe improvements in market sentiment, both on the debt and equity side. European banks have been taking advantage of favourable market conditions by continuing to raise equity ahead of the 2014 EU-wide stress test. The capital raised is allowing banks to continue the repair of their balance sheets through front-loading impairments and additional provisioning without deteriorating the absolute levels of tier 1 capital. The improvements on the banks' asset side were coupled with a deleveraging process, which so far continues in an orderly fashion and has led to a marked decrease of risk weighted assets, a shedding of risky assets and to a shrinking of balance sheets by €3.4 trillion since 2011. The de-risking process is also helping banks to improve their capital ratios”. (MB)