ECB meets over banking stress as US rescue eases immediate fears
European Central Bank supervisors met to tackle growing cracks in the banking system on Friday after a $30 billion lifeline for U.S. lender First Republic Bank (FRC.N) eased fears of its imminent collapse.
Large U.S. banks on Thursday swooped in to rescue the San Francisco-based bank, which was caught up in a widening shock triggered by the collapse of two other mid-size U.S. lenders.
The rescue package came less than a day after Credit Suisse (CSGN.S) clinched an emergency central bank loan of up to $54 billion to shore up its liquidity. Shares in Switzerland’s second-largest bank were lower in Friday morning trading.
The two deals helped restore some calm to global markets, after a torrid week for banking stocks.
“The Supervisory Board is meeting to exchange views and to provide members with an update on recent developments in the banking sector,” an ECB spokesperson told Reuters.
The ECB, which on Thursday raised interest rates by 50 basis points, held another ad hoc supervisory board meeting earlier this week in an unusual move ahead of a scheduled gathering next week.
“French and European banks are very solid,” ECB policymaker and French central bank governor Francois Villeroy de Galhau, told BFM business radio.
Analysts says authorities appear eager to quickly deal with systemic risks, but worry the potential for a full-blown banking crisis is far from over.
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