Guindos guarantees that the liquidity position of European banks is robust and exposure to Credit Suisse is limited

The Vice-President of the ECB, Luís de Guindos, said this Thursday that “the liquidity positions of European banks are robust, with ratios clearly above the minimums”. On the other hand, “capital buffers are of high quality,” he said.

The vice-president of the European Central Bank (ECB), Luis de Guindos, said, also this Thursday, that the exposure of European banks to Credit Suisse is “limited” and “is not concentrated”.

At the press conference held after the ECB’s monetary policy meeting which decided to raise interest rates by 50 basis points, as planned, Luís de Guindos considered that European banks “are resilient” and that, compared to the financial crisis 2008, the situation in the sector “is much better”.

“The increase in interest rates is even positive in terms of banks’ margins”, said the vice-president of the ECB.

Regarding the situation at the US bank Silicon Valley Bank (SVB), Luís de Guindos defended that its model “was quite unique”, since there was an “imbalance between assets and liabilities”, which meant that this bank was exposed to any major change in interest rate policy.

“We are closely monitoring the tension in the markets and we are ready to act”, insisted Lagarde at the same press conference.

“The eurozone banking sector is resilient, with strong capital and liquidity positions. In any case, the set of monetary policy instruments of the ECB fully allows to provide, if necessary, support in terms of liquidity to the financial system of the euro area and preserve the regular transmission of monetary policy”, said the ECB in a statement.

In recent days, the banking sector has been going through a period of turbulence, first with the collapse of Silicon Valley Bank (SVB) and Signature Bank, in the United States, and then with the strong fall in the stock market on Wednesday of Credit Suisse. The US government and the country’s major banks came together this Thursday to advance a $30 billion rescue plan for First Republic Bank,

Credit Suisse also announced today that it will receive a loan of up to 50 billion Swiss francs (50.7 billion euros) from the central bank of Switzerland.

European Central Bank Vice President Luis de Guindos told finance ministers on Tuesday that some European Union banks may be vulnerable to financial strains due to rising interest rates.