Europe’s banks are not yet in the clear, a top EU regulator said Monday, two weeks after the collapse of Silicon Valley Bank in the United States unleashed turmoil in the global banking sector. José Manuel Campa, the head of the European Banking Authority , told a German newspaper that European lenders remained vulnerable following the demise of SVB and the subsequent emergency rescue of Credit Suisse by UBS. “The risks in the financial system remain very high,” he told Handelsblatt.
“The investigation is not yet concluded, but I can say already today that we don’t expect to find major institutions with significant solvency risks arising from unrealized losses,” Campa said. What next? Still, regulators and investors are on edge about potential pockets of vulnerability in the banking sector. SVB’s downfall was caused by a loss of confidence, which became a self-fulfilling prophecy as clients spread alarm on social media and yanked their cash from the bank.