In the banking sector, few rumors trigger such a sudden and frightening chain reaction as bankruptcy rumors. The stock markets suffer first. Then the lines reach the branches. After all, almost anything can happen. In southern Europe, the bank collapse of numerous companies in 2008 paved the way for a very difficult period of cuts, austerity and men in black. In Brussels, doubts were even expressed about the viability of the euro itself.
To avoid a return to the traumatic financial crisis of 2008, Europe has tightened lending conditions and minimum liquidity requirements for branches, but if a door remains open – socialization of losses, bailouts or new bubbles and deregulation cycles – there is always the possibility that it will reopen: In the year In 2023, the inflation crisis and the rise in interest rates have once again stirred up the worst spirits of the European banking system.
According to consulting firm S&P Global, the continent will be the second-largest banked region in the world in 2022. Its 37 representatives are surpassed only by Asia, which can introduce up to 41 units, a number that well reflects its strength and importance in the global financial system. Paris and London are its epicenters: together they contribute nine of the fifteen European banks with the highest asset value, led by HSBC, BNP Paribas, Crédit Agricole and Barclays.
The Spanish Santander, the German Deutsche Bank, the Italians Intesa Sanpaolo and UniCredit and the Dutch ING are the only representatives of other countries that manage to break this French and British hegemony. In total, Europe’s top fifteen banks have assets worth more than $25 trillion, about 50% more than the European Union’s GDP.
Still, the request for help raised alarm at Credit Suisse, Switzerland’s second-largest bank, which was unable to cope with the new economic situation after years of poor results. The final solution is not far from the solution used several times during the financial crisis, when many regional banks were taken over by more consolidated entities: UBS, the leading Swiss banking sector and 12th largest on the continent, has taken control.
The move served to silence some alarms but not to restore calm to the markets. However, the European Central Bank, confident in the resilience of the financial system, raised interest rates again to 3.50% at its last meeting in March.
Although financial institutions assure that the collapse of Silicon Valley Bank and Credit Suisse is unlikely to lead to major setbacks, the community’s financial structure continues to show cracks that make it vulnerable to any economic shock, no matter how small.
The EU, for example, cannot guarantee all of its citizens’ savings: on paper there is a common mechanism that covers deposits up to 100,000 euros, but in practice the guarantee depends on national systems and their liquidity. And when you consider that there are countries with systemic problems that are being punished by the markets – the sovereign debt premiums of Italy, Spain and France rose after the SBV bankruptcy – the situation can quickly become complicated.
To resolve these imbalances, after the 2008 crisis, European Union leaders proposed a banking union that would give Brussels more powers, unify banks’ credit conditions and prevent their eventual rescue from relying more or less on national ones Governments to be dependent on economic power. . However, the measure was frozen due to opposition, particularly from Germany, although debate has resumed in recent weeks.
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