The European Court of Auditors wants the European Central Bank (ECB) to tighten up its supervision of credit risks at large banks. This is recorded by the financial controller a report which came out on Friday. These risks mainly concern borrowers who do not repay their loans. Through tighter supervision, the ECB must prevent banks from going bankrupt, as has happened in the past.
The Court acknowledges that the ECB has already stepped up its efforts, but says more is needed to monitor risks closely. As an example, the auditor cites higher capital requirements for banks with a higher risk and stricter measures for banks with persistent shortcomings.
The report comes some two months after Swiss bank Credit Suisse was bailed out in a takeover and three banks in the United States collapsed. There is still turmoil in the banking sector. The outlook for banks in the EU is also deteriorating, according to the ECB, due to the current difficult economic conditions. The ECB supervises 110 major banks that manage the bulk of the EU’s assets.