The European Central Bank has warned that eurozone banks are at risk of mounting bad loans and a funding squeeze due to rising interest rates, higher inflation and a likely recession.
Supervisors at the ECB plan more frequent inspections of bank offices and will carry out more “targeted reviews” of the largest lenders in the 19-country single currency zone to push them to address these growing risks, the regulator said on Monday.
Publishing its priorities for banking supervision next year, the ECB said lending to energy-intensive sectors, residential mortgages and commercial property was particularly vulnerable to the deteriorating economic environment.