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The European Central Bank is asking creditors to prepare for the effects of the war in Ukraine on the European economy


According to the source, the eurozone banks had just passed the period of measures imposed during the pandemic, including the dividend policy, when Russia invaded Ukraine on February 24 and the economic outlook worsened again.

In 2020, the European Central Bank called on the banks it oversees to stop paying dividends in order to keep its own funds and use its profits to support the pandemic-affected economy. Recently, the ECB lifted the ban on dividend payments and share buybacks, dropping a crisis measure that forced creditors to keep their capital during the pandemic, informs Agerpres.

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Supervisors are now telling banks to “re-evaluate” their expectations, including how much capital they have available, Enria said.

“We have asked banks to re-evaluate their capital projections and trajectories in the context of the new macroeconomic framework, taking into account adverse scenarios,” he added.

Higher energy and commodity prices have led to rising inflation and slowing growth, affecting banks’ financial performance. However, banks have shown resilience in 2021 and continue to clean up their balance sheets, despite an increase in the number of companies that went bankrupt in the last three months of 2021, when pandemic stimulus measures were dropped, the ECB official said. .

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