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.