CAIXY Caixabank (PK)

By Pierre Bertrand

CaixaBank SA and Banco Santander SA said Friday that the recent turmoil in the financial sector highlights the need for a European banking union.

CaixaBank Chairman Jose Ignacio Goirigolzarri said during the Spanish bank's annual general meeting that the process of forming the union must be completed and that the creation of a European deposit guarantee needs to be accelerated.

"I believe it is vital to speed up the creation of the European deposit guarantee fund as a means to avoid any feedback loop between bank risk and sovereign risk, which is the ultimate objective of the Union," Mr. Goirigolzarri said.

It is a stance Spanish peer Santander echoed Friday during its annual general meeting.

"This would be the best response to Europe's challenges, which would contribute to generating greater confidence, and would be a solid base to attract investment needed for growth," Santander Executive Chair Ana Botin said of the banking union and deposit guarantee fund.

The banking union emerged in the wake of the 2008 financial crisis to form a single rule book for the European Union's financial sector. It led to the establishment of both a single supervisory and a single resolution mechanism for euro-area banks, according to the EU Commission's website.

A common system for deposit protection, however, hasn't yet been established, the commission's website says.

Write to Pierre Bertrand at pierre.bertrand@wsj.com

(END) Dow Jones Newswires

March 31, 2023 07:32 ET (11:32 GMT)

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