European bank provisions hit $28b

Banks in Europe set aside about $28 billion to cover bad loans in the second quarter, led by British firms including HSBC Holdings Plc and Lloyds Banking Group Plc and consumer lenders such as Banco Santander SA.

About half of Europe’s 20 largest lenders stashed away far more for souring loans in the second quarter than in the first, while the other half provisioned about the same amount or less, reflecting diverging views on the economic effects of the pandemic on their markets.

Yet European banks are still trailing their Wall Street peers, which have set aside far more this year. The gap that reflects both US lenders’ higher profits, and the severity of the outbreak in the world’s largest economy.