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ECB called on banks to raise capital to prevent possible recession

At issue is Andrea Enria’s warning for banks to focus on “a broader set of actions that will put their profitability and business models on a sustainable pace for the foreseeable future.”

European Central Bank (ECB) Supervisory Board Chairman Andrea Enria has specifically called on some eurozone banks to hold sufficient capital because of a possible recession.

Speaking at an event organized by the European Banking Confederation, Enria said that banks should consider such capital increases when announcing their distribution plans.

Read also: Europe stocks steady as eurozone inflation hits record high

“From a capital adequacy point of view, we have specifically asked some banks to revise their capital trajectories to include sufficiently conservative and updated adverse macroeconomic scenarios, including recessionary assumptions consistent with the negative official projections,” Andrea Enria added.

The ECB supervisory board chairman stressed that “these capital trajectories should be used by banks when announcing their distribution plans after having dialogued with their supervisory teams.”

Read more at: TSF

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