State-backed Covid loans have light capital impact

Lorenzo Migliorato
23 Nov 2020

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Bank loans guaranteed by European Union member states tied up three times less regulatory capital than other corporate obligations, data from the European Banking Authority (EBA) shows.

As of end-June, €181 billion ($213.9 billion) of loans held by EU banks were subject to state-backed guarantees, about 1.2% of their total. Banks accounting for €162 billion of these exposures also reported their associated risk-weighted asset (RWA) amounts: €29 billion. RWAs are used to set regulatory capital

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