MADRID, March 21 (Reuters) - Euro zone banks are resilient in the face of market tensions and have robust capital and liquidity positions, ECB policymaker Pablo Hernandez de Cos said in an interview released on Tuesday as officials sought to underpin confidence in the financial sector.
De Cos also said that it was unlikely for either Spanish or European lenders to crystallise unrealised losses on their government debt portfolios as happened to Silicon Valley Bank, given their high liquidity ratios.
To fund redemptions, SVB sold a $21 billion bond portfolio at a loss of $1.8 billion.
"The euro area banking system, including, of course, the Spanish banking system, is facing these market tensions when it is highly resilient and has sound capital and liquidity positions," De Cos told newspaper Expansion.
The interview was published following UBS group's state-backed takeover at the weekend of Credit Suisse, to which Spanish banks have only a "residual" exposure, Deputy Bank of Spain Governor said last week.
On Tuesday, shares in Sabadell (SABE.MC) rose 7%, while Santander (SAN.MC), BBVA (BBVA.MC) and Caixabank were around 5% up at 1109 GMT as they recovered from steep losses last week, while shares in Deutsche Bank (DBKGn.DE) rose 4%.
Echoing comments from European Central Bank President Christine Lagarde, De Cos said that the banking sector throughout the euro area was resilient.
"This has been the result of the regulatory reform agreed at international level over the last decade which, in the case of Europe, has been applied to all banks, regardless of their size," De Cos.
Last week, a supervisory source said euro zone banks had done a good job of transferring assets from their trading books to their "hold-to-maturity" portfolio, meaning they didn't have to account for lower market prices as a result of rising interest rates.
"Any potential gains or losses have already been recognised against the banks' capital," De Cos said, adding that only if banks were to sell these portfolios before maturity would the potential unrealised losses materialise.
"Given banks' high liquidity ratios and the improvement in their earnings in 2022, this circumstance is unlikely," he added.
According to a study from consultant company PwC, Spanish banks held 500 billion euros in sovereign debt in June of 2022, 8% more than at the end 2021, of which 52% was made up of Spanish public debt.
