The European Central Bank says EU banks are underestimating risk in their portfolios. Because banks use their own models to determine the value of assets, they’ve undercounted their risk-weighted assets by $330 billion, or 12 percent.
Danielle Lacalle wrote the book “Escape from the Central Bank Trap” and is also the chief economist at the Tressis hedge fund, with $6 billion in assets under management. Lacalle says the new report doesn’t surprise him.