The European Central Bank (ECB) wants to put a damper on themarket for leveraged loans even before it heats up.

Banking supervisors will look at individual lenders' exposure tothe loans, which are often used to finance corporate buyouts, andother risky debt to preempt the threat that risks could quicklymount in the market, Sabine Lautenschlaeger, vice chair of theECB's supervisory arm, said in New York on Tuesday. The ECB alsomay publish regulatory guidelines to set expectations for theindustry, she said.

“I do not see it as the biggest risk, but I see a certain dangerthat market players see things a tad brighter than they are,”Lautenschlaeger said. “So it is up to me as a supervisor, and up toyou as risk managers, to counterbalance this view,” she said in aspeech to the Global Association of Risk Professionals.

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