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PARIS, Nov 27 (Reuters) – Banks are facing a bigger challenge over their profitability than their solvency, Bank of France Governor Francois Villeroy de Galhau said on Friday, arguing in favour of lifting a dividend ban.
Villeroy said that low interest rates had eroded European banks’ profitability while the sector remained fragmented and vulnerable to shocks.
In France, the current economic crisis was weighing more on banks’ capacity to generate profits than their financial health, Villeroy said.
“The issue today is less about solvency than about the health of French financial institutions,” Villeroy told a conference at the ACPR French financial authority. (Reporting by Leigh Thomas; Editing by Kirsten Donovan)
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