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© Reuters. File picture: March 12, 2016, the headquarters of the European Central Bank (ECB) in Frankfurt, Germany. REUTERS/Kai Pfaffenbach
FRANKFURT (Reuters)-The European Central Bank’s deputy governor, Luis De Kindos, said on Monday that the credit quality of euro zone banks has declined and that this trend may accelerate once government support measures are cancelled.
Dekindos said in a speech: “There are already some early signs of weakening credit quality. For example, the proportion of loans with elevated credit risk in the report has risen significantly. Once support measures are phased out, asset quality may deteriorate.”
He added: “In industries that have been hit harder by the pandemic, such as the service industry, the deterioration is most pronounced, while the problem of loan performance in the manufacturing industry is less common.”
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