European banks forced to hand over more liquidity data to the ECB after SVB collapse
European banks will have to provide regulators more frequent information on liquidity levels starting from September, a top supervisor said over the weekend.
In an interview published on the European Centra Bank’s (ECB) website, Andrea Enria, chair of the ECB supervisory board, warned that European banks were still in a “delicate phase” due to the impact of rising interest rates and the war in Ukraine.
He said all of these potentially raised risks for banks’ liquidity levels, which have been heavily scrutinised after massive bank runs at Silicon Valley Bank (SVB) and Credit Suisse.
“We have decided to send banks, starting in September, a request for information on a weekly basis, in order to have fresher data that will allow us to better monitor liquidity developments,” Enria said.
“It’s a question of sending, with greater frequency, the information on liquidity that banks already send us on a monthly basis,” he continued.
Under current rules, banks are required to provide liquidity information to the ECB on a monthly basis.
The change should make it easier for the central bank to monitor and react to developments in “the most liquid assets and liabilities, like deposits”.
Although Enria backed more frequent provision of data, he suggested SVB’s collapse did not warrant more fundamental regulatory changes. “I don’t believe that it would be wise to recalibrate liquidity requirements on the basis of such an extreme business model as that of SVB,” he said.
Despite the need for greater supervision, Enria remained confident that Europe’s biggest banks were in a strong position.
He suggested the results of the European banking stress tests, which will be announced in the next few days, will show the strength of European banks.
“The results will reflect the better starting point of European banks, with much higher levels of capital and a much stronger and reliable quality of assets,” he said.
The stress tests are run by the ECB in conjunction with the European Banking Authority. The results help determine the levels of capital that banks must hold.
Banks in the US and UK have sailed through tests set by the Fed and Bank of England, pointing to the underlying resilience of the banking system despite jitters earlier in the year.