Montagner warns European banks against complacency amid high profits
Speaking at a conference in Paris on October 1, 2026, ECB Supervisory Board member Patrick Montagner warned that European banks must not let strong profitability foster complacency amid rising geopolitical, cyber and credit risks.
Profits mask emerging credit risks
European banks currently show robust capital ratios and improved profitability, but ECB Supervisory Board member Patrick Montagner warned that favorable conditions should not foster excessive optimism.
Drawing parallels to the run-up to the 2008 financial crisis, Montagner stressed that vulnerabilities often accumulate during periods of high earnings.
The ECB is intensifying its scrutiny of credit risk management, focusing on loan origination standards, collateral valuations and pricing models.
Supervisors are also tracking growing interconnections between banks and private credit markets, alongside physical climate impacts following severe 2026 heatwaves.
Frontier models accelerate cyber threats
Operational and technological vulnerabilities represent a second supervisory priority.
Montagner highlighted that frontier artificial intelligence models accelerate cyberattack capabilities, requiring banks to remediate IT vulnerabilities immediately rather than over several months.
He also identified persistent deficits in internal risk data aggregation and reporting.
Addressing calls for deregulation, Montagner urged lawmakers not to dismantle post-2008 prudential frameworks under the pretext of simplification.
A timely warning against amnesia
The ECB supervisory warning arrives at a critical juncture as bank lobbying for regulatory rollback intensifies.
High returns from elevated interest rates provide a buffer, yet they frequently conceal structural underwriting flaws.
Preserving tough post-crisis capital rules remains essential to prevent past mistakes from repeating.