ECB's Enria says reforming some banks is 'disappointingly slow'

FILE PHOTO: Andrea Enria, chairperson of the European Banking Authority, speaks at Reuters Summit interview in London

By Huw Jones

LONDON (Reuters) -The European Central Bank has made "disappointingly slow" progress in tackling core issues at some banks it supervises, while too little integration in the sector remains a "dangerous fault line," ECB top banking supervisor Andrea Enria said on Monday.

The collapse of Credit Suisse and a clutch of U.S. banks including Silicon Valley Bank raised issues about the quality of supervision which several regulators including the Federal Reserve and the global Basel Committee have acknowledged in stock takes.

Enria told an audience of students at the London School of Economics that it was not always easy to tackle problems at banks such as the sustainability of their business models or how they are run after years of focusing on building up their capital buffers to sufficient levels.

"Our track record at the ECB is mixed: we have had some success in driving effective remediation and changes in internal governance, but in some cases, progress has been disappointingly slow," said Enria, who is due to stand down after five years in the job.

"But a failure to tackle weaknesses that have been identified could lead to existential threats for banks, as we saw at Credit Suisse and some US regional banks in the Spring of 2023," he added.

More cross-border consolidation among banks would put the sector on a stronger footing, but there is a lack of support for this from EU states, he said.

"The harsh reality is that the lack of integration creates a dangerous fault line in our institutional set-up, and this cannot be fixed by effective supervision alone. But if the system breaks down again, repairing it could prove to be very difficult and expensive."

(Reporting by Huw Jones; Editing by Chris Reese and Hugh Lawson)