"It is important to keep an open mind at this stage about whether any potential revisions to the global regulatory and supervisory framework are needed." (Editing by Catherine Evans)
Messaging: jan.strupczewski.reuters.com@reuters.net)) By Jan Strupczewski and Balazs Koranyi
STOCKHOLM, April 28 (Reuters) - Last month's turmoil in
the banking sector barely affected European Union lenders but
there remains an urgent need to make the sector even more
resilient given how fast social media-created runs can sink
banks, top EU officials said on Friday.
EU finance ministers were briefed by heads of the EU's
Single Supervisory Mechanism and the Single Resolution Board on
lessons that could be drawn from the collapse of U.S. lenders
Silicon Valley Bank and Signature Bank, and the forced takeover
of Credit Suisse by UBS in the bloc's neighbour Switzerland.
"The speed with which recent events in the financial sector
have unfolded is a key theme that emerged from our discussion
today," Paschal Donohoe, chair of the ministers said after they
met for regular talks outside Stockholm.
He stressed that EU banks were resilient and stabile thanks
to rules the EU put in place since the banking crisis in 2008,
but told a news conference: "Recent events have reminded us of
the work that we still need to do."
In March, depositors fled Silicon Valley Bank (SIVB.O),
withdrawing $42 billion in 24 hours, some via their mobile
phones. Information about the bank's difficulties spread fast
online, creating a social media-driven bank run.
"The fact is that with social media today, when there are
risks, or withdrawals of deposits, it goes much faster than in
the past," the head of the euro zone's ESM bailout fund Pierre
Gramegna told the news conference.
Officials said the bank turbulence added urgency to
discussions of a European Commission proposal to broaden the
EU's bank resolution framework, now applied to just over 100 of
the biggest European banks, to smaller and medium-sized lenders.
The proposal, called Crisis Management and Deposit Insurance
(CMDI) was requested by EU finance ministers in mid-2022. It
would ensure that the resolution of smaller banks could be paid
for from the EU's resolution fund, financed by banks, rather
than by taxpayers.
It would also provide money for winding down failing lenders
from national deposit insurance schemes which are also financed
by banks, and guarantee deposits of up to 100,000 euros not only
for individuals, as now, but also for companies and other
institutions.
"The second phase of how we can deepen our resilience is
responding back to the Commission policy with regard to
reviewing the framework for crisis management, deposit insurance
schemes targeted in particular, the small- and medium-sized
banks within the European Union," Donohoe said.
But the Commission's proposal is opposed by Germany, which
is worried it could disrupt a system used by its own regional
banks.
Some central bankers said Europe should be ready for change
even though there is no immediate pressure from a banking
crisis.
"We must remain acutely aware of the dangers ... where
memories of banking crises fade over time and vested interests
call for regulatory rollbacks," said Spain's central bank
governor Pablo Hernandez de Cos, who also chairs the
international Basel Committee of bank regulators.
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