ESA riport of risks for the EU financial system

The Joint Committee of the European Supervisory Authorities (ESAs) published today its September 2016 Report on Risks and Vulnerabilities in the EU Financial System:


This Report focuses on recent developments concerning the low growth and low yield environment and its potential effects on financial institutions' profitability and asset quality, and highlights concerns related to the interconnectedness in the EU financial system.

Another major reason of the low profitability is the high proportion of non-perfoming loans, which may have a negative effect on the medium-range sustainability of the financial system, These risks have persisted for some time and can be related to lasting effects of the 2007 financial crisis. However, the EU financial system is also vulnerable to more immediate risks such as the result of the UK referendum on EU membership which has added political and legal uncertainties to those already affecting the financial system.

Source: EBA, riport