Banks in the euro zone are already recording a drop in credit quality and this trend is likely to accelerate once government support measures are removed, European Central Bank Vice President Luis de Guindos said on Monday.
“There are already some early signs of weakening credit quality, for example the share of loans reported as subject to heightened credit risk has risen significantly and asset quality is likely to deteriorate once support measures are phased out,” de Guindos said in a speech.
“The deterioration is most visible in sectors that were hit harder by the pandemic, such as services, while loan performance problems are less prevalent in manufacturing,” he added.
Source: Reuters