ESRB Publishes Risk Dashboard in September 2019

The dashboard shows that the debt levels remain elevated across countries and sectors in EU, although over the medium-term most countries have deleveraged somewhat. The prices of residential real estate continued to rise considerably in all, but one, EU member states. The profitability of banks in the EU slightly remained broadly stable in the second quarter of 2019. The median solvency ratio of the EU insurance sector decreased by about 15% to 193%. The EU insurers’ asset allocation remained stable. In terms of credit quality characteristics, the EU insurers’ bond portfolio remained largely at investment-grade quality, while there seems to have been a move toward less liquid assets. Meanwhile, total assets under management in the EU investment funds and other financial institutions increased in the first quarter of 2019, reflecting a rise in asset valuations, following strong declines in the final quarter of 2018. The overall picture drawn from the credit counterparty indicators also remained broadly stable.

At the October meeting, the Board considered a framework that should enable ESRB to assess the vulnerabilities related to the commercial real estate sector and the adequacy of the macro-prudential policy responses to address these vulnerabilities. The framework for commercial real estate needs to take into account the particular features of that sector, including the important role played by foreign institutional investors. ESRB will publish a report on this in the coming months. The Board also discussed that the provision of financial services across borders is an important feature of ongoing financial integration in EU. In this regard, the Board discussed the key issues related to the exchange and collection of information on branches of credit institutions for macro-prudential purposes. The Board also exchanged views on an interim report of the Expert Group on Margins and Haircuts, which revisits and extends the previous ESRB findings regarding procyclicality associated with margin and haircut practices. ESRB will publish this interim report in the coming months and will continue to explore the relevant policy options.

Related Links

• Press Release
• ESRB Dashboard (PDF)
• Overview Note (PDF)
• Annex I (PDF)
• Annex II (PDF)

Keywords: Europe, EU, Banking, Insurance, Securities, Systemic Risk, Risk Dashboard, Residential Real Estate, NPLs, Commercial Real Estate, Credit Risk, Procyclicality, ESRB