Stronger crisis management rules to protect EU bank customers needed - Fitzgerald
Press Statement from Frances Fitzgerald MEP
Wednesday 21st March 2023
Frances Fitzgerald calls for stronger crisis management rules to protect EU bank customers in wake of Silicon Valley Bank collapse and Credit Suisse rescue
Dublin MEP Frances Fitzgerald has called on the EU and Member States to urgently agree stronger rules to protect customer savings in banks facing financial challenges and ensure taxpayers are not on the hook for bank bailouts. The call comes in the wake of last week’s collapse of Silicon Valley Bank and the rescue of Credit Suisse, which threatened to cause a ripple effect in the European banking system.
The European Commission has long promised to come forward with a proposal to reform the EU’s crisis management system to protect deposits in banks facing financial difficulties. At present, EU bank customers receive different levels of protections in different countries. However, the Commission’s proposal has not yet been published and Member States are divided on how comprehensive the rules should be.
Speaking in the European Parliament today, Frances Fitzgerald MEP said, “The collapse of Silicon Valley Bank in the United States and the rescue of Credit Suisse had the potential to cause a ripple effect and threaten the stability of banks in Europe. While regulators have taken action, we must learn the lessons. It is vital that we protect ordinary account holders and taxpayers in the EU so that customer deposits are insured in the event of any future bank collapses and taxpayers are not expected to be on the hook for bank rescues.
“That is why I am calling on the EU and Member States to urgently agree to a stronger common fund for banks in financial difficulty to be funded by banks themselves and also common rules on crisis management and deposit guarantee schemes across Europe. At present, bank deposit guarantee schemes vary widely across each Member State. This means that there is no common protection for EU bank customers and savers. Recent events have shown that we cannot take for granted that we have learned the lessons of the financial crisis. We need a common European Deposit Insurance Scheme. It is time for all parties to put aside their objections and agree to strong and decisive actions in the interests of savers and taxpayers.
“The need for strong financial buffers against any liquidity shortages and also to ensure that losses are not carried by taxpayers is more important than ever. We all remember the dark days of the financial crisis and the impact that had on countries across the EU. The collapse of Silicon Valley Bank showed that a recurrence is never far away. This is why we should put strong foundations in place and not let politics stand in the way."