Regulatory Monitoring - February 2026

The ESRB published a report on financial stability risks from linkages between banks and the non-bank financial intermediation (NBFI) sector. The report focuses on bank funding from NBFI entities and credit exposure to NBFI entities as well as banks’ derivatives exposures to NBFI entities. It finds linkages between banks and the NBFI sector to be significant, and while they do not currently pose acute risks to financial stability, they create important vulnerabilities that could amplify stress... By: A&O Shearman