The EBA advocates working “case by case” the difficulties of the mortgaged

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The president of the European Banking Authority (EBA)the Spanish Joseph Manuel Campahas been in favor of the banking sector first addressing the deterioration of the economic environment and its impact on its results with “prudence” and then “work case by case” in facilitating alternatives to individuals who may face difficulties in paying their mortgages.

In his appearance before the Committee on Economic and Monetary Affairs of the European Parliament, the president of the EBA has questioned that rate hikes are in the interest of bankssince it would be necessary to take into account the macroeconomic environment in which the entities operate and if said environment deteriorates, this affects the profits of the sector and the vulnerability will generate an increase in non-performing loans.

“First you have to show prudence in an environment that is deteriorating very quickly and then providing alternatives to individuals; there may be situations involving temporary shocks and we have to modify the profile of that person and work on a case-by-case basis”, Campa defended when questioned about those people who find it difficult to pay their mortgage in the face of escalating inflation and rate hikes and interest.

On the other hand, Campa has underlined that the prevalence of variable or fixed rates is very different between the different countries of the European Unionadding the importance of consumers having options, although he recognized that with the rise in interest rates “the perspective” on variable-rate loans has changed.

Warns of the start of a European recession

The European Union (EU) is located “more at the beginning than at the end” of a recession of “uncertain depth and duration”, in the opinion of José Manuel Campa, who warned about the “first signs” that point to a “weakening” of banking assets. The head of the EBA previously pointed out some “good news” related to the capital and liquidity position of the European banking sector.

In particular, he highlighted that the capital ratio CET1 it is located above 15% and that the ratios of liquidity coverage and long-term financing “are also above what is legally required.” Against this, Campa contrasted the “bad news” that derives from an “increasingly deteriorated” macroeconomic environment, from a higher inflation and persistent and the rises in interest rates adopted by the European Central Bank (ECB). “We see the first signs of weakening asset qualityfinancing conditions are worsening and volatility continues,” he said.

Source: lainformacion.com

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