EBA Publishes Risk Assessment of the European Banking System

The European Banking Authority has published a risk assessment report on the European Banking System, which provides an update on potential risks and vulnerabilities.  Highlights of the report include observations that:

  • Markets for bank funding have improved, as well as secondary market prices for debt and equity;
  • Spreads remain high and the level of asset encumbrance could create an adverse effect on the availability and cost of funding; and
  • Although banks have significantly strengthened their capital positions, concerns remain about the quality of banks’ asset and valuation criteria in many jurisdictions.