Remarks by Luis de Guindos, Vice-President of the ECB, at the 18th edition of the Banking Sector Industry Meeting “Banking: Navigating the Wave of Inflation”

Madrid, 17 May 2023

Earlier this year, substantial global market tensions emerged following the failure of two mid-sized banks in the United States and the loss of confidence in Credit Suisse.

As a result, banking sector risks are now squarely back in the focus.

While market sentiment towards euro area banks had improved markedly in 2022, this reversed abruptly in March following the events I just mentioned. Market tensions led to sharp declines in euro area bank stock prices and in riskier bank bond markets, notably in the Additional Tier 1 segment.

Fortunately, turmoil in the euro area was short lived. The limited exposures of euro area banks to the sources of US and Swiss bank stress, their solid fundamentals, and the comprehensive regulatory and supervisory frameworks in place shielded them from a more severe financial…