MNI BRIEF: ECB Warning Over Balance Sheet Effect Of War, Rates

The European Central Bank’s Banking Supervisory Board has asked “significant” financial institutions to carry out an analysis of how a complete cut-off of Russian energy supplies would affect their balance sheets, a prospect Board member Elizabeth McCaul described as “realistic” in an interview Tuesday.

Margin calls as a result of recent commodities market volatility could affect the overall functioning of the marketplace and are a source of concern, she said. The ECB has also written to banks to highlight further concerns over their risk appetite frameworks in the context of the war in Ukraine and the changing interest rate environment, McCaul said, and will follow up with those most affected by leveraged transactions later this year.