EU banking regulator warns sector still at risk

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The head of the European Banking Authority (EBA) warned that the banking sector remained very vulnerable even after measures to stem the fallout of crises at Silicon Valley Bank and Credit Suisse, in comments to the Germany’s Handelsblatt newspaper.

“The risks in the financial system remain very high,” EBA chair Jose Manuel Campa said in an interview published on Monday.

Campa added that rising interest rates continued to weigh on financial markets and that the European Union regulator was monitoring unrealised losses in banks’ balance sheets closely.

After the collapse of two U.S. lenders this month and last weekend’s Swiss-government-orchestrated takeover of troubled Credit Suisse markets have remained jittery. Late last week, shares of Deutsche Bank plunged amid concerns that regulators and central banks have yet to contain the worst shock to the banking sector since the 2008 global financial crisis.

Global central banks including the Federal Reserve have recently taken measures to enhance the provision of liquidity through the standing U.S. dollar swap line arrangements. At the same time, however, both the European Central Bank (ECB) and the Fed have continued to hike rates over the past two weeks, as they remain dead set on fighting stubbornly high price pressure.

via Reuters

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