2023-03-23 13:26:05 ET
Responding to the erosion of confidence in such financial institutions as Silicon Valley Bank and Credit Suisse Group ( NYSE: CS ), European Union regulators are starting to explore ways to ensure that banks manage their liquidity better.
No formal talks have begun, but some individuals sitting on the European Central Bank's Supervisory Board are seeking to get a better grasp on the share of deposits that lenders can expect to hold onto during a crisis, Bloomberg reported Thursday, citing people familiar with the conversations.
Incremental changes to the way liquidity is approached could have large effects on how banks run their businesses. While global regulators tightened liquidity rulses since the 2008 financial crisis, technology has changed that allows funds to be moved more quickly. In addition, social media can boost the risk of bank runs as information, whether true or not, can spread in minutes.
After the failure of Silicon Valley Bank, Silvergate Capital ( SI ), and Signature Bank, followed by the forced sale of Credit Suisse ( CS ), the Bank of International Settlement's Basel Committee said on Thursday it has met virtually in recent weeks to assessrecent market developments and risks to the global banking system and related vulnerabilities and to discuss a range of policy and supervisory initiatives."
Banks and supervisors must "be vigilant to the evolving outlook to ensure that the global banking system is resilient," the committee noted . In addition, it reaffirmed the expectation of implementing all aspects of the Basel III framework "in a full and consistent manner, as soon as possible."
Note that Basel III is an international set of measures developed by the Basel Committee on Banking Supervision in response to the 2007-'09 financial crisis.
Large global banking stocks are mostly in the red in Thursday trading: Deutsche Bank ( NYSE: DB ) -2.7% , HSBC Holdings ( NYSE: HSBC ) -1.7% , JPMorgan Chase ( NYSE: JPM ) +0.5% , Barclays ( NYSE: BCS ) -1.1% , Lloyds Banking Group ( NYSE: LYG ) -0.9% , Citigroup ( NYSE: C ) +0.7% , Bank of America ( NYSE: BAC ) -1.2% . UBS Group ( NYSE: UBS ), which agreed to acquire Credit Suisse ( CS ) in a Swiss government-brokered deal, saw its registered ordinary shares drop 4.0% in U.S. trading.
More on the Bank Crisis:
- SNB chief says Credit Suisse Swiss unit unlikely to be spun off
- FINMA stands by $17B AT1 bond wipeout in Credit Suisse takeover
- Janet Yellen says not weighing covering all uninsured bank deposit
- Chubb discloses zero exposure to any Credit Suisse AT1 bond
- UBS Acquisition Of Credit Suisse: Deal Of The Centur
For further details see:
EU regulators to focus on liquidity rules after Credit Suisse debacle - report