MNI BRIEF: Covid Harm To Banks Still Unknown: ECB's Elderson

The impact of the Covid-19 crisis on the European banking sector has yet to be fully revealed, European Central Bank Executive Board member Frank Elderson said Monday, with non-performing loans and low profitability of key concern. Speaking for the first time since taking up the role, Elderson said it was vital banks avoid deepening the crisis by accumulating an increasing amount of bad debt, as businesses and consumers struggle with the ongoing economic shock caused by the pandemic and measures to contain it.

He called on banks to provide "clarity" on their asset quality and to be proactive in tackling existing NPLs, while also regularly assessing borrowers' ability to meet loan repayments, including those loans covered by public support measures such as payment moratoria.

Of the other supervisory challenges on the horizon, his "first concern " is the low profitability of euro area banks," Elderson said, followed by dealing with the consequences of Brexit, Elderson told a hearing of the Committee on Economic and Monetary Affairs of the European Parliament.