European banks are cautioned to prepare for increasing insolvencies and geopolitical risks as the European Central Bank's new chief banking supervisor, Claudia Buch, signals concerns about the financial system's resilience. Despite initial recovery from the pandemic and Russia's invasion of Ukraine, risks still loom, with bankruptcies and loan defaults expected to rise. The warning also pertains to the changing industrial landscape and the need for banks to reassess their strategies. Buch's emphasis on banks using more specific scenarios to assess risks is an indicator of her vigilance. Moreover, she addresses concerns about excessive regulation and the valuation gap between European and US banks, highlighting the importance of stricter rules. Additionally, the ECB's push for climate change risk compliance and stress testing banks' defenses against cyber attacks are key areas of focus. The team also applies pressure on European banks with operations in Russia to exit, emphasizing the need for downsizing activities and exit strategies.