Current Report: Risks for Banks are Increasing

Last Updated: 4. Januar 2024By

The large European banking groups are stable and profitable. At least that’s what the report from the state banking supervisory authority, which was published at the end of last year, says.

The average profit of the 109 banking groups supervised by the ECB is now in the double-digit range for the first time. However, the banks continue to struggle with low stock market values – a sign that investors do not really trust the good numbers. It is not expected that the profits will remain consistently good.

And in fact, there are still some problems in the banks despite the good numbers. This is also known by Andrea Enria, the head of the European banking supervisory authority. In an interview with, Enria addressed the growing risks for banks. These include, above all, the consequences of the climate crisis.

Guidelines for climate and environmental risks In 2020, banking supervisors created guidelines for dealing with climate and environmental risks. In these, risks were specifically named, such as investments in emission-intensive companies and climate-damaging industries.

The stock market values of these companies could dramatically change for the worse due to the changing attitudes of private investors as well as climate disasters. In addition, extreme weather events are considered a serious source of danger, which could impede the business capabilities of companies.

During supervision discussions, bank managers were directly asked how the bank intends to manage business risks from climate change. The solutions offered were limited, so a test was launched in March of last year in which banks had to simulate a shock from a significantly increased CO2 price.

The result was not satisfactory. „A number of banks had not done their homework,“ Frank Elderson, deputy head of the supervisory board, was quoted on The institutions now have to make up for it. Managing climate risks is „one of our main priorities in supervision,“ Elderson continued.

The danger of real estate risks In addition to climate risks, warnings are also issued regarding failed real estate financing. In particular, an incorrect evaluation of loans could be dangerous.

In real estate financing, it is important that the buildings used as collateral actually generate the necessary returns and maintain their sale value. If borrowers encounter problems, banks must write off collateral for borrowed money or make provisions, according to

Last year, the banking supervisory authority did not restrict itself to just issuing warnings. Banks were also forced to remedy deficiencies. However, this has so far only been moderately successful.

The official report speaks clearly: about a quarter of the affected institutions were reprimanded for poor management and high credit risk. Every tenth institution had problems remaining liquid in times of crisis.

For three banking groups, drastic measures were even necessary to ensure liquidity. The computer systems used in banks are also cause for concern. These are often hopelessly outdated.

How to protect your assets from a banking crisis Something is brewing in the banking world. The consequences of the climate crisis could be dramatic and also have an impact on your assets. Therefore, it is important to take measures for asset protection early on, as it is better to be prepared than to have to react later.

Recommendations can be found in „Sicheres Geld“ (Secure Money), a consulting service for critical investors who want active asset protection. Readers have already benefited from it, as they were able to protect and increase their assets in the past two years despite the crisis.