Supervisors should pay ‘special attention’ to asset encumbrance, says EBA

By Tyler Davies
19 Jan 2021

Levels of asset encumbrance increased sharply in the first half of 2020, the European Banking Authority said in a report this week. It warned that roughly half of the assets eligible as collateral for central bank funding schemes are now encumbered.

The ratio of encumbered assets over total assets jumped to 27.5% in the first six months of 2020, up from 25% at the end of the previous year. 

This rise mostly came about as a result of EU banks increasing their reliance on central bank funding ...

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