EBA Report on Risks and Vulnerabilities of the EU Banking System

On July 17, the European Banking Authority (EBA) published a report on risks and vulnerabilities of the EU banking system.  The report considered EBA key risk indicators and EBA risk assessment questionnaires for banks and market analysts.  The report highlighted the following:

  • Increasing uncertainty about the quality of banks’ assets and valuation.
  • Significant strategic and implementation challenges. This includes the CRD IV reforms and proposals to establish a single supervisory mechanism for banking union member states.
  • Detrimental business practices of EU banks such as product misselling and failures regarding rate benchmark setting.  This will require heightened supervisory oversight and improvements in institutions’ risk management functions, compliance procedures and risk culture to improve consumer relationships with banks.  Report.