Banking risk will increase markedly in the euro zone

Banking risk, insofar as retail banks are concerned, is going to increase markedly in the euro zone, leading to a persistently high banking risk premium, under the effect of : Rising corporate bankruptcies and unemployment, which is inevitable even if delayed by economic stimulus policies; The destruction of capital (stranded assets) in the balance sheets of banks’ corporate clients due to the energy transition and prolonged difficulties for some economic sectors; The realisation of these problems (bankruptcies, unemployment, capital destruction) in an environment of low bank returns due to flat yield curves and rising fixed costs (ethics, risk analysis, new technologies, etc.).