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European Banking Industry: Difference between revisions
→2023 Banking Health
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* "S&P Global Ratings maintains its view that, overall, European banks benefit in the rising interest rate environment. This remains our base case. As we said last week, rated European banks do not exhibit a combination of large unrealized losses on securities portfolios and highly confidence-sensitive funding models. Credit Suisse is an outlier among major European banks. We see the business and risk management deficiencies that led to Credit Suisse's takeover by UBS as quite unique in nature and scope relative to the European banking sector" | * "S&P Global Ratings maintains its view that, overall, European banks benefit in the rising interest rate environment. This remains our base case. As we said last week, rated European banks do not exhibit a combination of large unrealized losses on securities portfolios and highly confidence-sensitive funding models. Credit Suisse is an outlier among major European banks. We see the business and risk management deficiencies that led to Credit Suisse's takeover by UBS as quite unique in nature and scope relative to the European banking sector" | ||
European banks | === Risks from Dollar Liabilities === | ||
As of 2018 BIS research, European banks had about $3 trillion in dollar liabilities reported in Europe, the level has decreased since 2008, but the share has increased to more than 50%. This could represent a potential risk since the ECB doesn't have the ability to regulate and print dollars as needed for these obligations.<ref>https://www.bis.org/publ/qtrpdf/r_qt1812b.pdf</ref> | |||
However, FED has direct swap lines with Europe. This swap line is unlimited, and the ECB only has to post Euro currency as collateral to be able to get dollars. This will limit the liquidity risks in Europe for dollar needs. <ref>https://www.ecb.europa.eu/mopo/implement/liquidity_lines/html/index.en.html</ref> | |||
== References == | == References == | ||