FRANKFURT (Reuters) - Euro zone banks may be more resilient than before Europe’s debt crisis but poor profitability raises the threat that lenders take on too much risk in search for profit, European Central Bank supervisor Sabine Lautenschlaeger said on Tuesday.
“The viability of business models is currently one of the main points of attention,” said Lautenschlaeger, who also sits on the ECB’s Executive board. “We must warn (banks) against the temptation to prop up their profits by taking on too much risk.”
“An excessive search for yield could easily lead to new troubles for the banks themselves and the financial system as a whole,” she said. “And against the backdrop of low profitability, abundant liquidity and high competition, this is not a purely hypothetical concern.”
Reporting by Balazs Koranyi; Editing by Francesco Canepa