The European Central Bank will remove a capital surcharge on some lenders after they addressed shortcomings in their leveraged finance businesses.
“Some banks have fixed the problems and will see the capital add-on go away,” Andrea Enria, who chairs the ECB’s Supervisory Board, said in an interview in Frankfurt. “Others have not and will keep it for a bit longer.”
European lenders have in recent years piled into credit for highly indebted borrowers, which were often the subject of private equity takeovers, as they sought to compete with US firms in an area that can generate high fees and help them win other business. The ECB raised concerns as far back as 2017 and the issue became emblematic of Enria’s push for lenders to get a grip on their credit risks.
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