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LONDON, April 1 (Reuters) – Banking companies should really beware of faux news that could trigger a run on their deposits, the European Union’s banking watchdog claimed in a warning on Friday about prospective fallout from the war in Ukraine.
“As industry sentiment stays remarkably risky and driven by news circulation, banks’ liquidity amounts can become susceptible due to distribute of inaccurate info,” the European Banking Authority mentioned in its most current “risk dashboard”, which targeted on exposures to Russia and Ukraine.
“These types of strategies that unfold inaccurate details might end result in deposit outflows from specific banking companies,” EBA said.
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EBA reported exposures of banks in the bloc to Russia are as well minimal to threaten money security, but economic fallout from the war in Ukraine and cyber assaults could strike the profitability of lenders.
EU financial institutions had exposures totalling 76 billion euros ($84 billion) to Russia and 11 billion euros to Ukraine in the fourth quarter of 2021, mostly amid Austrian, French and Italian loan providers.
Only Austrian and Hungarian banking companies described far more than 2% of their complete exposures, such as in loans and innovations, to Russia and Ukraine, EBA said.
“Based mostly on the EBA’s first evaluation, immediate exposures to Russia, Belarus and Ukraine are minimal, but second-round consequences may well be much more content from a monetary steadiness standpoint,” it mentioned.
2nd-spherical results include direct economic fallout of the war this sort of as the fiscal affect, the effect of sanctions, elevated risks from cyber attacks, and the longer-phrase impression on offer chains in the global overall economy, EBA stated.
Bigger inflation and reduced growth could dent lending and offset the positive aspects of mounting interest rates for financial institutions, EBA reported.
Financial institutions in the EU continued to have over-all solid core capital concentrations of 15.4% at the finish of the fourth quarter of 2021, EBA claimed.
($1 = .9047 euros)
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Reporting by Huw Jones Modifying by Catherine Evans
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