ECB Urges Banks to Tackle Credit as Pandemic Support Expires

The European Central Bank is urging lenders to do a better job of gauging the risks they face from a potential spike in defaults as the pandemic increasingly hits companies and consumers.

The worsening economy has slowed banks’ efforts to reduce existing bad debts and “there is also an embedded level of distress in loan books that is not yet fully evident,” the ECB said in a statement on Thursday. Bloomberg reported earlier this week that the regulator was stepping up its scrutiny of bank loans.