At least two major banks in Europe are examining scenarios of contagion that could spread to the region’s banking sector and are waiting for the Federal Reserve and ECB to step in with stronger signs of support, two senior executives familiar with the deliberations told Reuters.
The effects of the confidence crisis at Credit Suisse Group AG and the failure of two US banks could continue to ripple through the financial system next week, the two executives separately told Reuters on Sunday.
The two banks held their own internal deliberations on how soon the European Central Bank should intervene to highlight the banks’ resilience, especially their capital and liquidity positions, according to the sources.
Central to these internal discussions is whether such statements could backfire and create even more panic if made too soon, the sources said.
Executives said their banks and the sector were well capitalized and had strong liquidity, but feared the crisis of confidence could drag other banks down.
One of the executives said the Federal Reserve may have to act first, as the failures of Silicon Valley Bank and Signature Bank in the US have triggered concerns in Europe.
The ECB declined to comment. A Fed spokesman had no immediate comment.