European banks are “extremely solid”, unlike “certain American banks”, assures the Banque de France

She wants to reassure at all costs. “French and European banks are extremely solid”said Friday, March 17, the Governor of the Banque de France, François Villeroy de Galhau, the day after a new rate hike by the European Central Bank, in full turmoil for the banking system.

“European banks are not in the situation of certain American banks for a very simple reason, which is that they are not subject to the same rules”said François Villeroy de Galhau on BFM Business, referring to the recent bankruptcies of regional banks in the United States, which rocked the markets.

The governor highlighted the Basel III regulations, put in place after the 2008 financial crisis, “sometimes criticized” but who proved the“efficiency” rules “on their liquidity and on their own funds”. According to him, 400 European banking groups are subject to this regulation, against only 13 in the United States (the largest establishments).

The special case of Credit Suisse

François Villeroy de Galhau mentioned a decision “taken at the time of the Trump administration in 2019 (…) which consisted in exempting medium or small banks from the Basel III rules”recalling that the banks which went bankrupt last week in the United States were part of it.

These bankruptcies led to a fall in the stock markets, which recovered at the start of the week before plunging again, with fears about the health of Credit Suisse. The second Swiss bank tried to reassure in the middle of the week by announcing a loan of 50 billion Swiss francs (50.6 billion euros) to the national bank of the country for its restructuring.

Credit Suisse is “a particular case known for several years”underlined the Governor of the Banque de France. “It is a bank that has both business model difficulties (…) and failures in its internal control system”he added, encouraging the establishment to go “at the end of the job” of recovery.