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Some banks in the European Union may face losses on leveraged loans in the pandemic-hit economy, the EU’s banking watchdog, the European Banking Authority (EBA), said on Thursday.

“Banks may end up unable to offload leveraged loans,” the EBA warned, as reported by Reuters. “Boards of banks should fully assess exposures to leveraged loans.”

Market reaction

The Euro Stoxx 50 Index extended its slide on this statement and was last seen losing 2.63% on the day at 3,213. Meanwhile, Germany’s DAX 30 was down 3.35% at 12,392.