UPV - How European Banks Can Support The Recovery

• A new IMF study assesses the impact of the pandemic on European banks' capital through its effect on profitability, asset quality, and risk exposures.
• Supportive policies are extremely important in reducing both the extent and variability of banks' capital erosion.
• For many larger banks, hybrid capital - which contains elements of both debt and equity - is likely to be an important source of funds at a time when the cost of capital remains high.
• A protracted recovery could result in much larger credit losses and higher provisions for bad loans.

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