*
Banks in Europe have solid liquidity, capital positions -
De Cos
*
Losses on government debt unlikely at European banks - De
Cos
*
European bank shares rebound strongly on Tuesday
(Recasts with euro zone banks, adds quotes on gov't debt)
By Jesús Aguado
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 rose 7%, while
Santander , BBVA and Caixabank were
around 5% up at 1109 GMT as they recovered from steep losses
last week, while shares in Deutsche Bank 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.
(Reporting by Jesús Aguado; additional reporting by Emma
Pinedo; editing by Inti Landauro and Christina Fincher)
