LCR rises for EU banks in Q1, but liquidity strategies diverge

Eurozone banks are still hoarding liquidity, but as vaccines take effect a rethink may be needed

Liquidity coverage ratios (LCRs) for European Union banks increased in the first quarter of 2021, though the pace decelerated from the two preceding quarters and individual firms showed marked divergence in their liquidity strategies. 

Across the 12 firms disclosing regulatory LCRs for both quarters – including four global systemically important banks (G-Sibs) – the average LCR stood at 169% in Q1 2021, up from 162.4% in Q4 2020. That marked a slight slowing from the seven-percentage point