Europe’s banking sector is not in crisis despite the collapse of two major players on the continent, a sector official in France has said.
Despite claims to the contrary, Philippe Brassac, the head of the French Banking Federation (FBF), has insisted that there is no banking crisis currently plaguing Europe.
The statement comes amid floundering investor confidence in European banking, with the collapse of major player Credit Suisse as well as the UK branch of the Silicon Valley Bank prompting concerns that the whole sector could be facing contagion.
According to a report by Le Figaro, Brassac has rejected such a pessimistic outlook, insisting that problems with the current banking system are limited to the United States, and the European businesses in the sector will remain isolated from any issues.
“There is no banking crisis,” the senior banker insisted regarding Europe, insisting that while “there are banks which are in difficulty”, these businesses are ultimately in trouble for their “own reasons”, isolated from the general sector.
He went on to claim that there was no chance of “contagion” when it came to U.S. banking problems spreading to Europe, arguing that regulations on the continent have done a good job of isolating the sector from serious issues.
Brassac’s impressive confidence in the European banking sector stands in stark contrast with current market sentiment, which has been relatively unsteady since the collapse of America’s Silicon Valley Bank earlier this month.
The firm’s demise was shortly followed by the failure of its UK counterpart, which was rescued in a deal with HSBC, with Credit Suisse being the latest major player in the sector to bite the dust, being bought out by former competitor UBS.
Market sentiment did not initially take kindly to these takeovers, with shares of UBS, in particular, plummeting by as much as 16 per cent in the wake of its Credit Suisse rescue deal.
Investor confidence appears to have now returned, at least for the time being, with CNBC reporting that the bank has since reversed its losses, seeing its shares rise 12 per cent on Tuesday.
Such an increase was also felt by the European banking sector more generally, with the news outlet saying that the value of the sector as a whole grew by around 4 per cent on the same day, though expects that investors will remain “skittish” for a little while longer.
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