After a new tightening of 50 basis points on Thursday, the European Central Bank (ECB) is calling a surprise meeting to discuss vulnerabilities in the banking sector. The previous days were marked by the rout of banking stocks, caused by the bankruptcy of SVB and then amplified by the fall in the stock market of Credit Suisse.
This Friday morning, the governor of the Banque de France François Villeroy de Galhau assured that European banks were “extremely solid”.
Information to remember
> The ECB calls a surprise meeting on the health of banks
> Calm is back on European markets
> The Governor of the Banque de France assures that European banks are “solid”
» Follow the events of this Friday, March 17
11:03 a.m. – ECB “hawks” reaffirm the merits of another rate hike
In the wake of a 50 basis point rate hike, central bank governors of Estonia, Lithuania and Slovakia who are inflation hardliners (also known as “hawks”) have suggested that the economy still needed another round of monetary tightening, despite strains in the banking sector.
10:49 am – ANALYSIS – Banks: following the storm, still questions
European banks have experienced two stock market storms in recent days, following the fall of Silicon Valley Bank, then concerns weighing on Credit Suisse. Two very distinct crises yet with a common backdrop: the rise in interest rates, long hoped for by the sector, which is also causing damage.
10:26 am – Some banks expect lower ECB rate hike in May
Several banks including Goldman Sachs expect the European Central Bank to raise a quarter point in May. The ECB faces both strains in the banking sector and high core inflation. Thursday, the institution gave no indication of the future trajectory of rates.
9:55 a.m. – Meeting of the ECB Supervisory Board on the banking sector
According to Archyde.com, the European Central Bank is convening a surprise supervisory board meeting on Friday to discuss stress and vulnerabilities in the banking sector, following recent market volatility. The objective of this meeting is to monitor the liquidity of banks in the euro zone and to observe any vulnerability to a “bank run”.
9:46 a.m. – Peter Kazimir (ECB) believes that it will be necessary to continue to increase rates
European Central Bank Governing Council member Peter Kazimir said recent events in financial markets have not changed his view: rates will have to keep rising.
On Thursday, investors hoped that the institution would moderate its turn of the screw to ease tensions around the banking sector. But it finally decided to raise its rates by 50 basis points.
9:23 a.m. – European stock markets keep their momentum, calmed by the support provided to the banking sector
At 9:09 a.m., the Paris market advanced by 0.94%, Frankfurt by 0.91% and London by 0.98%, maintaining their renewed optimism from the day before following their plunge on Wednesday. Credit Suisse reassured investors on Thursday, announcing a loan of 50 billion Swiss francs from the Swiss National Bank (SNB).
8:56 a.m. – French and European banks are “extremely solid”, assures François Villeroy de Galhau
In the followingmath of another rate hike by the European Central Bank and in a context of turmoil for the banking system, the Governor of the Banque de France, François Villeroy de Galhau, wanted to reassure regarding the solidity of the banks.
“European banks 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 indicated this morning on BFM Business.
The highlights of the last days
> US banks borrowed 165 billion from the Fed in one week
On Thursday, the Fed published the amounts borrowed from it by banks during the week of Thursday March 9 to Wednesday March 15. They exploded to 164.8 billion dollars, following 4.6 billion the previous week. The 2008 record of 111 billion has been broken.
The rush was predictable, since this period created intense stress for banking establishments, eager to withdraw cash to meet withdrawal requests from their worried customers. The week opened with a bank panic at SVB, a first bankruptcy, then a second with that of Signature Bank.
