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Is There a Worrying Systemic Risk in European Banking?

10 mins.
16 MARCH, 2023
Leopoldo Torralba
US Europe AER Global AER Personal Banking sector
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Doubts about Credit Suisse's solvency and liquidity, after the recent chapter of SVB's bankruptcy in the US, are triggering alarms about whether European banking is on the verge of experiencing a systemic risk fifteen years after the Great Recession. The aforementioned raises red flags about a potential solvency and liquidity crisis in the sector which would in turn lead to a deep economic, real estate and market crisis. In this brief report we incisively analyse the differences in European banking between 2008 and today, dissect the credit and market risk of its assets, as well as the solvency and liquidity risk, to finally conclude whether the situation is a matter for serious concern or whether it should not be.

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