Banks in the euro zone will have to raise provisions to cope with economic slowdown

Vice-President of the European Central Bank (ECB) Luis de Guindos gives a statement during the second day of the Informal Meeting of EU Ministers for Economics and Financial Affairs in Berlin, Germany September 12, 2020. Odd Andersen/Pool via REUTERS/File Photo

MADRID, Sept 26 (Reuters) - Banks in the euro zone will have to raise provisions to cope with the consequences of the economic slowdown due to the fallout from Russia's war in Ukraine, ECB Vice-president Luis De Guindos said on Monday.

"The economic slowdown will lead to a potential increase in insolvencies (...) we are already trying to get the banks to bring forward their plans because it is going to have an impact without a doubt," De Guindos said.

"Let's not be blinded by the short term effect, banks will have to increase provisions," he added, recognizing a short-term boost for banks from higher interest rates.

Reporting by Jesús Aguado; Editing by Emma Pinedo

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