FRANKFURT (AFX) – The expansion of the hedge fund industry may pose some risks to EU banks, even if their direct exposure to hedge funds is fairly limited, the European Central Bank said in a report.
EU banks’ direct exposure to hedge funds is growing rapidly but remains limited in relation to the banks’ balance sheets and total revenues, and in comparison with the exposure of US banks, it said.
Banks’ direct exposures to hedge funds therefore probably pose no threat to financial stability in the EU, the central bank said.
