Two big European banks turn to regulators to curb contagion risk

“At least two major banks in Europe are examining contagion scenarios in the region’s banking sector and looking to the Federal Reserve and ECB for stronger signs of support.two senior executives close to the discussions have told Reuters.

“The consequences of the crisis of confidence in Credit Suisse Group AG and the bankruptcy of two US banks could send ripples through the financial system next weekthe two executives told Reuters separately on Sunday,” Reuters reports.

The news also quotes the two anonymous people as saying that the two banks have held their internal deliberations on how quickly the European Central Bank should intervene to highlight the resilience of the banks, specifically their capital and liquidity positions, according to Reuters.

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Central to these internal discussions is whether such statements could create even more alarm if made too soon.

The executives said their banks and the sector are well capitalized and their liquidity is strong.but they fear that the confidence crisis will wipe out more lenders.

One of the executives said that the Federal Reserve might have to act firstas the failures of Silicon Valley Bank and Signature Bank in the United States earlier this month sparked unease in Europe.

A third executive from another big European bank told Reuters separately that they thought the ECB would be reluctant to make a public statement before the markets reopenedquestioning whether they would deem it necessary at this time and adding that the main focus was still on the talks in Switzerland.

On Saturday, Bloomberg News reported that a coalition of mid-size US banks, the Mid-Size Bank Coalition of America (MBCA), had asked regulators to extend FDIC insurance to all deposits over the next two yearsciting a letter from the MBCA to regulators.

The letter states that the extension of insurance stop the exodus of deposits from smaller banks, in turn helping to stabilize the banking sector.