ECB says changes could prompt some risky bank practices

09/30/2010 | Financial Times (tiered subscription model)

The European Central Bank said financial institutions are becoming more stable despite an uneven quality of economic recovery. The ECB also noted increased funding costs for banks, warning that the situation could prompt a return to risky strategies to bolster profits. AFME said it "welcomed the ECB's acknowledgment of the pressure that increased capital requirements will put on banks' ability both to attract investment and to lend to customers but it does not necessarily follow that risky behaviour will result. ... The banks have taken significant steps to improve risk management and corporate governance in the past two years".

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