Financial Institutions and Covid-19
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The financial crisis of 2008 has shown that banks and other financial institutions “feel” the impact of a crisis slightly delayed when asset quality starts to deteriorate and NPE levels increase. As this affects the capitalisation of banks and therefore their funding capabilities, the quality of the assets on bank balance sheets will have a strong influence on the economic recovery from the Covid-19 pandemic.
The economic and social impact of the Covid-19 will be one of the key drivers of change in the financial sector. And two areas which have already been the cornerstones for the transformation of the European financial sector – consolidation and digitalisation – are likely gather further momentum due to the pandemic.