The European Banking Authority will conduct a joint investigation with the European Systemic Risk Board and the Financial Stability Board.
The European Union’s banking regulator, the European Banking Authority (EBA), will conduct a joint investigation with the European Systemic Risk Board (ESRB) and the Financial Stability Board (FSB) to assess the interconnectedness of legacy banks with non-bank financial institutions (NBFIs), including hedge funds, private equity and crypto platforms.
The intention was announced by the chair of EBA, José Manuel Campa, in a Dec. 3 interview with the Financial Times. Campa believes that the whole “underlying chain in NBFIs” should be traced to understand the scale of the potential for contagion between banking and non-banking financial institutions in a stress situation:
The executive revealed that the EBA had already assessed the banks’ balance sheet exposures to non-banks, including loans. He believes NBFIs to be an “obscure sector” with a “not-homogenous” quality of available data.
