Cebs releases market crisis statement

Cebs issues a statement for EU banking groups on the market crisis, including Lehman’s collapse, AIG’s bailout and the US government’s toxic securities bailout package

LONDON – The Committee of European Banking Supervisors (Cebs) has published a statement on the current crisis in world markets. Cebs says it is watching market developments closely and has “joined forces” with international supervisors.

Cebs says it has intensified contact with supervisors, and that national supervisors across the European Union are keeping a close eye on individual banks, inter-bank markets and consequential counterparty risks – including the assessment of US regulatory proposals.

Home-host supervision of EU banking groups has been intensified as part of the focus. Cebs highlights its use of teleconferences on information exchange and “open co-operation” over exposures and counterparty risk.

Cebs says aggregate exposures of EU banks to the ongoing dissolution of failed US bank Lehman Brothers accounts for no more than 2% of the capital base of EU cross-border banking groups – comprising secured and unsecured exposures, mostly in derivatives, securities, loans and credit lines. As part of its analysis, Cebs is conducting a snapshot of Lehman’s legal situation in Europe, and says heightened market disclosure by EU banks and supervisors is particularly vital over Lehman.

“In our view, banks’ exposures to Lehman Brothers are manageable and mostly non-material, compared with the banks’ total assets and capital base,” says Cebs in a press statement.

Cebs says it has established a task force on the consequences for EU banks of the $700 billion US bailout of banks’ toxic securities. On the exposure of EU banks to the US AIG bailout, Cebs believes counterparty risks are sufficiently mitigated for now.