European banks are subject to stronger supervision than many US peers and have proved robust and stable during market turmoil, Bank of France Governor Francois Villeroy de Galhau said.
(Bloomberg) — European banks are subject to stronger supervision than many US peers and have proved robust and stable during market turmoil, Bank of France Governor Francois Villeroy de Galhau said.
Speaking at Bloomberg’s Future of Finance forum in Paris, the central banker said European lenders also benefit from more diversified business models that perform well when interest rates rise.
“Our banks are robust, with substantial capital and liquidity buffers,” said Villeroy, who sits on the European Central Bank Governing Council.
“They are all subject to a) stringent Basel requirements and b) to single and strong supervision within the Banking Union since 2014, which on these two regards makes a big difference with many US banks.”
The French central banker’s comments point to growing confidence among European policymakers that the continent can avoid the difficulties facing regional banks in the US.
On May 1, JPMorgan Chase & Co. stepped in to take over failed lender First Republic Bank. The deal marked the second-biggest bank failure ever in the US and the third this year alone, bringing March’s banking crisis back into focus after a relative lull in the weeks since Silicon Valley Bank and Signature Bank went under.
Villeroy said the resilience of European banking is helping to lure investors relocating from London after Brexit, with Paris benefiting particularly as the only center to attract all segments of the financial industry.
“The momentum has lastingly shifted from London to continental Europe,” Villeroy said.
“Combine this with the strength of some key sectors of our economy; the result is that Paris now stands as the first stock market capitalization in Europe.”
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