The European Union banking sector is in “overall good shape” and there are “no immediate parallels” with the collapse of the Silicon Valley Bank, the bloc’s financial services chief said.
(Bloomberg) — The European Union banking sector is in “overall good shape” and there are “no immediate parallels” with the collapse of the Silicon Valley Bank, the bloc’s financial services chief said.
“We are monitoring the situation in the US carefully,” Mairead McGuinness told the European Parliament on Wednesday. “The direct impact on the European Union seems to be limited.”
McGuinness said SVB has little presence in the EU and the European Commission is in touch with the relevant supervisory authorities. While the fallout initially weighed on the European banking sector, the situation has since calmed down, she added. She didn’t address the latest developments related to Credit Suisse AG, whose stock plunged Wednesday to the lowest level on record.
McGuinness added that the EU still needs a more effective crisis management toolbox for the banking sector to protect deposit confidence, financial stability and taxpayers.
The EU banking sector has built up its resilience over recent years and is supervised closely by national and EU authorities. McGuinness noted that the collapsed US banks, including Signature Bank and Silvergate Bank, weren’t subject to the strictest regulatory requirements for liquidity because the US does not apply them to mid-sized and smaller banks. In the EU, the Basel prudential standards are applied to all banks.
“Had this been the case in the US and the Basel requirements on liquidity applied, it is likely these US banks would have had a stronger liquidity position,” she said. “This introduces an important layer of caution into the prudential regulation and supervision of the EU banking sector,” including liquidity risks, interest rate risk and the need to cover unrealized losses on bond portfolios with capital.
Euro-Area Finance Chiefs See Limited Impact From SVB Collapse
–With assistance from Katharina Rosskopf.
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