Bundesbank's Vice-President Issues Warning on Rising Insolvencies and Credit Risks in Germany's Financial Sector

Germany's major banks are being warned by Bundesbank Vice-President Claudia Buch to increase provisions for non-performing loans as corporate insolvencies and credit risks rise. The German economy, facing downward pressure from a construction collapse, is dealing with a rapid rise in interest rates. Buch emphasized the importance of resilience for banks, urging them to use their current profitability to strengthen capital, liquidity, and IT investments to protect against cyber risks. While German banks enjoyed a strong third quarter, provisioning for non-performing loans did not increase as much as desired, given the uncertain economic environment. Buch expects corporate insolvencies and credit risks to increase, emphasizing the need for banks to enhance their resilience.