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ECB Warns European Banks May Need More Bad-Loan Provisions

  • Financial Stability Review cites pandemic strains on companies
  • Vice president says some bank provisions “look optimistic”
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WATCH: ECB Vice President Luis de Guindos says the supervisory arm is yet to decide on allowing banks to resume paying dividends and is hopeful about news of a vaccine, describing it as "a ray of hope."Source: Bloomberg
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Euro-area banks will probably have to set aside more money to soak up losses when government pandemic support ends and the economy grapples with massively increased debt, the European Central Bank said.

Provisions for losses on loans to companies are lower than in previous crises and below those seen in the U.S., the ECB said in its Financial Stability Review. That’s partly because measures by European governments and the central bank have reduced default risks, and partly because of weak profitability at banks.