June 1, 2017 / 9:25 AM / 6 months ago

Small banks can pose big risks, ECB supervisor warns

FRANKFURT (Reuters) - Reducing reporting requirements for European banks based on their size would pose inherent risks as smaller lenders can still cause major disruptions, European Central Bank supervisor Pentti Hakkarainen said on Thursday.

Pentti Hakkarainen, Deputy Governor of Bank of Finland and European Central Bank (ECB) President Mario Draghi speak during the Euro Finance Week in Frankfurt, Germany, November 18 , 2016. REUTERS/Ralph Orlowski/Files

Hakkarainen’s comments challenge the views of some at the Bundesbank that reporting requirements for Germany’s numerous small lenders should be reduced to cut their administrative burden.

“The past has shown us many times that it is quite possible for small banks to cause severe disruption to the economy, for example during the US savings and loans crisis, and also the Nordic experience,” Hakkarainen said.

“So I advise against the proposal that I understand is currently under discussion, which would reduce reporting requirements for smaller banks in rather a crude way.”

Reporting by Balazs Koranyi; Editing by Hugh Lawson

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