Mr. Brian Hayes:

The market volatility to which the Senator referred had an impact for funding costs across the market, notwithstanding that the collapses were seen in Credit Suisse. It was not so much the case in Credit Suisse as it was then bought over but it certainly was in the American case. The differences are really around the level of capital ratios in the European banking sector.

A top-tier single supervisory mechanism, SSM, regulated bank today has to have a balance sheet of at least €30 billion. The equivalent in the United States is about €200 billion. The case of SVB was cited, and that is an important one. It was very exposed to venture capital and tech, which have seen a significant downturn in recent times. However, it also had a small number of large uninsured depositors, whereas the typical Irish bank would have a large number of small depositors. The cases are, therefore, very different.

The other two big fundamental changes are with capital but also the supervisory system. Our banks have our local regulator, the Central Bank of Ireland, but we have a significant presence of the single supervisory mechanism, the European Central bank, ECB. Typically, in any month, what we call the joint supervisory team, JST, would be across all our banks. The JST is an international team of people who report directly to the Central Bank of Ireland and Frankfurt. The capital requirements Dr. Hunt mentioned, the liquidity covered ratio requirements and the supervisory requirements are a different world from what was in place eight or nine years ago. There is a fair degree of satisfaction at one level that, given the turbulence to which the Senator referred in the first quarter or two quarters of this year, broadly speaking, banking in the eurozone system has come through that. People have to be vigilant, however. There are significant risks.

Interest rate risk is one such risk. We have gone from a ten-year period of lower for longer rates to a very significant spike in ECB rates. That has intended and unintended consequences not just for the economy but also for funding requirements. We have to be vigilant. If the Senator speaks to any of the European regulators right now, their issue is around risk reduction, better governance models, stress testing the book and making sure it is stress tested from the perspective of a worst-case scenario. The rules of the game have changed from what they were eight or nine years ago. Insofar as the volatility in the first quarter of this year is concerned, we seem to have come through that relatively okay.