Banks in the euro zone will have to raise provisions to cope with economic slowdown

Banks in the euro zone will have to raise provisions to cope with the consequences of the economic slowdown due to the fallout from Russia’s war in Ukraine, ECB Vice-president Luis De Guindos said on Monday.

“The economic slowdown will lead to a potential increase in insolvencies (…) we are already trying to get the banks to bring forward their plans because it is going to have an impact without a doubt,” De Guindos said.

“Let’s not be blinded by the short term effect, banks will have to increase provisions,” he added, recognizing a short-term boost for banks from higher interest rates.
Source: Reuters (Reporting by Jesús Aguado; Editing by Emma Pinedo)