ECB probes eurozone banks on Silicon Valley Bank-style interest rate risks - reports

Part of stress test into the sector

The European Central Bank’s supervisory board is quizzing eurozone banks about their exposure to the same risks that brought down Silicon Valley Bank as part of a stress test into the banking sector.

According to a Financial Times report, chair Andrea Enria said at an event on Tuesday (25 April) that the bank is examining whether unrealised losses on lenders' bond portfolios, whose value has fallen sharply amid rising interest rates, could reduce their capital base in a crisis.  Enria said the central bank would ask banks to prove how insured they are against rising interest rates, and whether they had bought hedging products. As part of the quiz, the chair said the ECB would also request a list of the top 20 counterparties they had entered these contracts with.  The FT report not...