Transformation Events Fin&Tonic

Can Every Bank Collapse Within 4 Weeks? Navigating the Shifting Tides of Banking in a Challenging Landscape

Date:November 20, 2023

At our recent Fin&Tonic event the ever-evolving banking industry took centre stage, as a distinguished panel delved into the multifaceted challenges and risks faced by financial institutions. In this dynamic landscape, adaptability and foresight have become essential traits for building resilience. With the industry grappling with fluctuating interest rates, complex taxation issues, credit concerns, and stock market volatility, banks must navigate these turbulent waters with vigilance and preparedness. During the event, Marianne Collin (CRO – Belfius), Hans de Munck (CFO – ING), Peter Devlies (CEO – Argenta), and Dirk Wouters (CEO – Van Breda) shared insights that illuminated critical industry dynamics and answered the evening’s key question: “Can every bank collapse within 4 weeks?

The Belgian banking system, characterised by its strong focus on retail banking, enjoyed stability and ample liquidity for years. Yet, recent developments have introduced fresh challenges, demonstrating that even robust supervision can’t eliminate all risks. – Peter Devlies, CEO Argenta

Interest Rate Fluctuations: A Return to Normalcy

The recent resurgence of interest rates is challenging the banking industry to adapt to a new financial landscape. While some may perceive this as a dramatic shift, the consensus among the panellists was that it signifies a return to normalcy. The banking industry has endured an extended period of ultra-low interest rates, and this recalibration to more traditional rates has brought about a sense of unease. However, our experts pointed out that these rate fluctuations are not unexpected and that banks are equipped to deal with them. In fact, this shift positions banks to operate in a manner reminiscent of the past, effectively extending loans and managing customer accounts.

Money without-, with low-, or even with negative interest rates was the exception, not the standard. However, we’re now returning to the norm, where handling interest rate risk becomes more manageable. – Dirk Wouters, CEO Van Breda

The Taxation Conundrum: Surplus Profits or Capital Remuneration

The Belgian government has made a proposal to tax surplus profits of banks. This proposal raises mixed sentiments as there is no clear definition of what constitutes a surplus profit. The concern is that taxing surplus profits may not be the most appropriate approach, as it could alter the dynamics of the banking sector and hinder banks’ efforts to strengthen their capital bases.

Credit Crunch: Real or Perceived?

Contrary to popular belief, a credit crunch phenomenon is not necessarily induced by banks but is primarily rooted in decreased demand. For example, there has been a substantial drop in mortgage loan demand, which is not due to changes in banks’ lending criteria, but rather to investor hesitation in an environment of rising interest rates, uncertainties, and significant media influence. Consequently, banks are actively adapting their strategies to meet evolving customer needs, particularly in the mortgage sector.

Journalists and social media platforms have a duty to use their power responsibly, especially when it comes to reporting on the banking sector. Fake news can have a devastating impact on public confidence, and these institutions must do their utmost to ensure that they are not spreading misinformation.Hans De Munck, CFO ING

Stock Market Volatility: A Paradigm Shift?

For years, investors have funneled their money into the stock market under the belief “There Is No Alternative” (TINA) trade. However, the past 18 months we have witnessed a significant transformation as rising interest rates have made bonds, term deposit accounts, and other investment options more appealing. This shift has created a reverse motion, applying pressure on stock prices.

As a consequence, banking clients are pivoting away from stock investments and shifting their focus toward safer and more stable alternatives. The influx of deposits on term accounts creates a positive effect on the liquidity ratio’s of the bank, but it will put pressure on the bank to activate these deposits into credits.

The Cybersecurity Conundrum: An Ongoing Challenge

One of the most pressing and daunting challenges is the looming threat of cyberattacks. These attacks are inevitable, and banks must be perpetually vigilant and prepared. The focus has shifted to proactively planning for cybersecurity threats and ensuring effective communication in case of a cyberattack. Banks have made substantial investments in enhancing their digital security infrastructure, but the threat remains significant. Cybersecurity plays an important role in protecting sensitive customer data and maintaining trust within the banking sector.

In the fast-evolving tech landscape, the financial industry’s next crisis is not a matter of ‘if’ but ‘when’ a cyberattack will strike. Daily cyber threats across industries underscore the importance of resilience, responsiveness, and preparation. The key question is readiness: how quickly can we decide, communicate, and collaborate with regulators, authorities, employees, and clients? Being well-prepared is crucial.- Marianne Collin, CRO Belfius


The European banking sector is working hard to adapt to complex challenges, showing its determination and ability to navigate the changing financial landscape effectively. This underscores the need to be alert, responsive, and adaptable as banks prepare for future uncertainties. In the European Union, reasons for a bank collapse as seen in cases like Silicon Valley Bank and Credit Suisse, are less applicable. Their primary concern regarding a potential collapse or financial crisis revolves mostly around cybersecurity. By addressing these modern challenges with resilience and responsiveness, banks are ensuring stability and maintaining trust in the sector. Thus, our panel concludes that it is highly unlikely that European banks will collapse within four weeks.