BRUSSELS, March 24 (Reuters) – The European Union banking sector is resilient because it has strong capital and liquidity positions, European Union leaders said in a statement after a summit on Friday.
“The Banking Union has significantly strengthened the resilience of the EU banking system. Our banking sector is resilient, with strong capital and liquidity positions,” the statement said.
European Central Bank head Christine Lagarde told EU leaders euro zone banks were resilient because they have strong capital and liquidity positions, but that the ECB could provide liquidity if needed, EU officials said on Friday.
Lagarde was presenting her assessment of economic and financial developments to EU leaders as European banking stocks fell sharply, with Deutsche Bank and UBS knocked by worries that actions by regulators and central banks have not yet contained the worst problems.
“The euro area banking sector is resilient because it has strong capital and liquidity positions,” EU officials at the meeting reported Lagarde as telling the leaders.
“The euro area banking sector is strong because we have applied the regulatory reforms agreed internationally after the Global Financial Crisis to all of them,” she said.
“The ECB toolkit is fully equipped to provide liquidity to the euro area financial system, if needed,” she said.
It is very unlikely that the euro zone will suffer a new banking crisis, Dutch Prime Minister Mark Rutte said on Friday after an EU leaders summit in Brussels.
Rutte said the single currency’s banking sector was far stronger than it was a decade ago, such as with capital buffers and stress tests, and the economy was stronger too.
“I think that is very unlikely if you see how we have organised things in Europe,” he said, asked if he saw a repeat of the financial crisis. “It was a reaction to what happened then and that is different from the United States and Switzerland.”