The European Central Bank (ECB) has completely reformulated its banking supervision priorities to avoid the risk of lack of control at a particularly delicate moment for the economy, in which the war in Ukraine has caused "disturbances" that "intensify the pressures inflationary" and put the financial system to the test.
The Bank of Spain has distributed today the new ECB supervision objectives for the Single Supervisory Mechanism (ECB) between 2023 and 2025. To keep entities at bay, the central bank warns that it will carry out on-site inspections with special emphasis on aspects related to the real estate market, energy and raw materials.
The ECB's visits will focus on accounting aspects related to banks' corporate and real estate portfolios. Exposure to everything that has to do with the distribution of energy and raw materials will also be inspected.
The ECB calls for "extreme prudence on the part of credit institutions" and indicates that their first priority will be to "strengthen their resilience to immediate macrofinancial and geopolitical disturbances." "Elevated uncertainty and downside risks associated with the current macrofinancial and geopolitical environment are significantly affecting the outlook for the European banking sector," he says.
Its efforts will focus on banks calibrating the risks that lie ahead, with "solid and credible" capital, liquidity and financing plans capable of resisting "immediate macrofinancial and geopolitical disturbances."
The resistance tests to be carried out in 2023 will take into account the new requirements, with special attention to vulnerable sectors, among which brick continues to stand out. More control will be required in the granting of loans and in the monitoring of payments.
The ECB is also concerned about countries with a high percentage of variable mortgages. In Spain, this product is around 30% of the total and has been declining as uncertainty increased and customers were once again interested in fixed mortgages.
"The rise in the cost of living, the decline in real wages and the rise in interest rates are cause for concern, especially for credit institutions that operate in countries with a high proportion of variable-rate mortgages," he says. .
These risks are "persistent and highly relevant", especially now that "the euro area's growth prospects have deteriorated significantly throughout the year as a result of high inflation and the fallout from Russia's war in Ukraine". , points out.
"In some euro area countries," it warns, "gas supply disruptions could also hurt major gas consumers, such as metal, chemical, food and beverage producers."
