Six Eurozone banks fell short of ECB capital demands

There are still concerns about about business models, internal governance and operational risks

Six Eurozone banks have fallen short of the European Central Bank’s capital requirements and have been told to shore up their balance sheets or face tighter controls, ECB said on Tuesday. The Eurozone’s top banking supervisors kept both their mandatory capital requirements and their “guidance”, which is not binding, unchanged from the previous year, at an average 2.1% and 1.5%, respectively. 

Six out of the 109 banks, that participated in the evaluation, fell short of the capital guidance, compared to just one firm last year, the ECB said, without identifying the lenders. For those banks which have not taken satisfactory measures in the last quarter of 2019, remedial actions have been requested within a precise timeline.

The ECB’s top supervisor Andrea Enria (pictured) said during a press conference in Frankfurt he was “broadly satisfied” with the results but emphasised concerns about banks’ business models, internal governance and operational risks, probably a reference to recent money-laundering cases from Latvia to Malta.

The ECB’s annual review of banks comes as many lenders are struggling to make money in an environment of ultra-low interest rates, high legacy costs from their bricks-and-mortar branches, and amid a string of scandals related to money laundering.

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