European banking industry during recessions - statistics & facts
The European banking industry has undergone significant changes and improvements in its regulatory framework following the global financial crisis of 2008. The introduction of strict capital requirements by the European Banking Authority (EBA) has played a crucial role in enhancing the resilience of banks in the region. This resilience manifests, for instance, in the steadily declining non-performing loans ratio since 2015, reaching historically low levels of around three percent at the end of 2021. Furthermore, the industry demonstrated robust performance in terms of common equity tier 1 (CET1) ratio, one of the main precautionary measures to protect banks from a financial crisis. The total assets of the Eurosystem declined in 2022 compared to the previous year but remained well above the values reported prior to the COVID-19 pandemic. These indicators of stability and growth showcase the improved preparedness of European banks. Despite the enhanced regulatory framework, the European banking industry faced some challenges during subsequent recessions.
