MNI BRIEF: EZ NPL 'Worst Case Scenario' Less Likely - McCaul

Banks that fail to differentiate between temporary and permanent credit deterioration caused by the Covid-19 crisis or show a lack of transparency in their balance sheets could harm the euro area's economic post-pandemic recovery, European Central Bank Supervisory Board member Elizabeth McCaul said in an interview published Tuesday.

The ECB's worst case scenario of EUR 1.4 trillion worth of non-performing loans is now "less likely" to materialise, McCaul said, although cliff edge risks from the withdrawal of fiscal support remain, even as the support currently being offered to banks, and the expectation of its "appropriately calibrated, gradual reduction," means such dangers are mitigated.