Austrian Lenders can Cope with 2021s Wave of Insolvencies

Austrias financial sector is in a robust state and should be able to cope with the strain of rising company insolvencies next year when coronavirusrelated aid measures that have kept many firms afloat expire, its central bank said on Wednesday.

In its halfyearly Financial Stability Report, the Austrian National Bank ONB said the Alpine countrys lenders had stepped up risk provisioning in the first half of this year to prepare for the difficulties to come, and stress tests showed the banking sector had enough riskbearing capacity.

The Austrian financial sector is currently in a robust state, and this is one of the reasons why from todays point of view it can be expected to effectively cope with the risks to financial stability once the support measures expire, the ONB said in a statement summarising the reports findings.

Still, the quality of banks loan portfolios is bound to worsen markedly given the increase in insolvencies anticipated for 2021, it added, recommending that banks apply sustainable lending standards, in particular in real estate lending.

Reporting by Francois Murphy Editing by Robert Birsel

Source Reuters

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