European Union flags flutter outside the headquarters of the European Central Bank (ECB) in Frankfurt, Germany, April 21, 2016. REUTERS/Ralph Orlowski
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Fifty-one large eurozone banks are leaving themselves exposed to a sudden change in interest rates and may need to aside more capital against that risk, the European Central Bank said Monday.On aggregate, the ECB found that an increase of 200 basis points in interest rates would lead to a rise in net interest income of 4.1 percent in 2017 and of 10.5 percent by 2019 for the banks tested.The economic value of the banks' equity would, however, decrease on aggregate by 2.7 percent, the ECB said.Finally, the ECB warned that banks may be taking much of their customer deposits for granted based on recent years and failed to account for the rise of online banks and higher rates.
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