Leveraged finance: a supervisory concern in the Banking Union?

12-03-2019

The increased volume of “leveraged finance” in the banking sector has recently led US, EU, and international supervisory authorities to caution against related financial stability risks. This briefing summarises (i) the concept of leveraged finance, (ii) the warnings that the different supervisory authorities have issued, (iii) the market developments, (iv) key financial stability risks, (v) and the related actions taken so far by the ECB.

The increased volume of “leveraged finance” in the banking sector has recently led US, EU, and international supervisory authorities to caution against related financial stability risks. This briefing summarises (i) the concept of leveraged finance, (ii) the warnings that the different supervisory authorities have issued, (iii) the market developments, (iv) key financial stability risks, (v) and the related actions taken so far by the ECB.