A reassuring message in a context of potential panic on the markets. European banks are “extremely solid”, defended this Friday on BFM Business, François Villeroy de Galhau, governor of the Banque de France. And to ensure that they “are not in the situation of certain American banks for a very simple reason which is that they are not subject to the same rules”, he specified, in reference to the recent bankruptcies of regional banks, such as the Silicon Valley Bank in the United States, which rocked the markets.
The governor highlighted the Basel III regulations put in place after the 2008 financial crisis, “sometimes criticized” but which proved the “effectiveness” of the rules “on their liquidity and their own funds”. According to him, 400 European banking groups are subject to this regulation against 13 in the United States, the largest establishments.
François Villeroy de Galhau referred to a decision “taken at the time of the Trump administration in 2019 (…) which consisted in exempting medium or small banks from the Basel III rules”, recalling that the regional banks which went bankrupt last week last in the United States were among them.
Credit Suisse, a special case?
These bankruptcies led to a fall in the stock markets, which recovered at the start of the week before plunging again with fears about the health of Credit Suisse. The second Swiss bank tried to reassure in the middle of the week by announcing to borrow 50 billion Swiss francs (50.6 billion euros) from the country’s central bank for its restructuring. Credit Suisse is “a particular case known for several years”, underlined François Villeroy de Galhau.
“It is a bank that has both business model difficulties (…) and failures in its internal control system”, he added, encouraging the establishment to go “to the end of the work » recovery. This crisis did not prevent the European Central Bank from continuing its fight against inflation by increasing its rates by 0.5 percentage point as planned on Thursday.
“I confirm the priority to the fight against inflation”, declared the governor. “I believe that we have sent a signal of confidence which is strong and which is twofold, it is both confidence in our anti-inflation strategy and confidence in the solidity of European and French banks”, he added. he continued.