The European Central Bank (ECB)as supervisor of the banking sector, the Single Resolution Board (JUR) and the European Banking Authority (EBA for its acronym in English) have expressed their satisfaction with the measures adopted yesterday by the Swiss authorities to guarantee financial stability and have defended the soundness of the capital position and European bank liquidity.

“The European banking sector is resistantwith solid levels of capital and liquidity“, have indicated the financial authorities in a joint statement, after this Sunday UBS agreed to buy Credit Suisse in a transaction promoted by the Government of Switzerland.

Likewise, the three institutions have recalled that the resolution framework that implements in the European Union the reforms recommended by the Financial Stability Board after the financial crisis it has established the order in which the shareholders and creditors of a troubled bank must bear the losses.

In particular, common equity instruments are the first to absorb losses, and only after their full use would the amortization of additional Tier 1 capital be required.

This approach has been consistently applied in previous cases and will continue to guide the banking supervision actions of the SRB and the ECB in crisis interventions.

Source: Eitb

Alia

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