The European Central Bank expands its private credit risk investigation to over 20 banks.

Golden Ten Data June 15 - According to foreign media reports, the European Central Bank has roughly doubled the number of banks covered by its investigation into issues related to private credit exposure, as the industry is currently facing pressure from declining investor confidence. According to informed sources, this year the European Central Bank has asked more than 20 banks to provide more detailed information about their private credit exposure, whereas previous rounds of investigation covered about 12 banks. Sources also indicated that banks with significant links to private credit will be required to report relevant details annually. In recent months, as several funds have been forced to restrict investor redemptions, regulators have noticeably increased their attention on the industry. Although private credit is far smaller in the eurozone than in the United States, regulators remain concerned that traditional banks may be insufficient in identifying and quantifying related risks. Sharon Donnery, a member of the European Central Bank’s banking supervisory committee, stated last week: “Compared with other assets on banks’ balance sheets, these risk exposures remain relatively limited overall, but they are growing very quickly. The key issue is not only the scale of the exposure, but also whether banks have the ability to effectively aggregate and identify these risks.”