Have the article read by OpenAI (Beta). Please note that AI translations may take some time to process.Frankfurt (dpa) – The eurozone’s largest banks are well prepared for potential shocks, showing strong capital positions, ample liquidity and solid profitability, the European Central Bank said on Tuesday. Upon completion of its annual review of major lenders, the ECB said capital requirements for 2026 would remain broadly unchanged.
But the central bank warned that lenders “continue to operate in a challenging environment characterized by heightened geopolitical risks,” as well as rapid digitalization and increased competition from non-bank financial firms. “This requires forward-looking risks assessments and sufficient resilience,” the ECB said.
The ECB’s Supervisory Review and Evaluation Process determines what additional capital buffers may be needed for individual banks and helps guide how much they may return to shareholders through dividends. Created in the wake of the 2008 financial crisis, the supervisory arm directly oversees the biggest lenders in the 20-nation currency bloc. This year’s assessment covered 105 banks under its direct supervision.
The ECB said Tuesday that the required Common Equity Tier 1 (CET1) capital ratio for banks – an important shield against crises – is to remain at 11.2 percent in 2026. Meanwhile, it said banks continue to benefit from higher net interest income following the end of the zero-rate era, while buoyant equity markets are driving strong fee income from securities trading.
According to the ECB, the aggregated annualized return on equity rose to just above 10 percent by mid-2025, and asset quality remains solid. (18 november)
The editorial responsibility for the publication lies with dpa.