Coverage: Q2 2026 · Information to 13 July 2026
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TGB Quarterly Regional Banking Monitor · 13 July 2026
The ECB, Norges Bank and the Czech National Bank raised rates in the second quarter while the Bank of England, the Riksbank and the Swiss National Bank held, and supervisory data showed euro area banks with a 15.99% CET1 ratio and a 10.02% return on equity.
The desk view
The second quarter of 2026 brought rate increases in several European economies. The ECB raised its deposit facility rate to 2.25% from 17 June, the Czech National Bank raised its repo rate to 3.75% and Norges Bank, which raised its rate in May, signalled another increase, while the Bank of England, the Riksbank and the Swiss National Bank held. Banks met the shock from strength: euro area significant institutions reported a 15.99% CET1 ratio and a 10.02% return on equity, and major UK banks a 15.3% underlying RoTE. The pressure points are second-round effects on energy-intensive and trade-reliant borrowers and on consumer credit and mortgages, and the price of bank bond funding. Consolidation also moved, with UniCredit's position in Commerzbank reaching 47.59% and Intesa Sanpaolo bidding for Monte dei Paschi.
The regional picture
The quarter opened with energy prices pushed up by the war in the Middle East. On 30 April the ECB kept its deposit facility, main refinancing and marginal lending rates at 2.00%, 2.15% and 2.40%, but said the war had led to a sharp increase in energy prices and that the upside risks to inflation and the downside risks to growth had intensified. On 11 June it raised all three rates by 25bp, taking the deposit facility rate to 2.25% from 17 June. The decision was unanimous, and the Governing Council said it was not pre-committing to a particular rate path. Eurosystem staff projected headline inflation of 3.0% in 2026, 2.3% in 2027 and 2.0% in 2028, with growth of 0.8% in 2026.
Outside the euro area the response was more cautious. The Bank of England's Monetary Policy Committee held Bank Rate at 3.75% by 8–1 at its meeting ending on 29 April and by 7–2 at its meeting ending on 17 June, with the dissenters voting for 4%. Norges Bank raised its policy rate to 4.25% in May and held it on 17 June, while the Riksbank kept its rate at 1.75% on 17 June but said there was some probability that it would be raised later this year. The Czech National Bank raised its two-week repo rate by 0.25 percentage point to 3.75% on 18 June, from 3.50%. The Swiss National Bank left its policy rate at 0% on 18 June and said that, if necessary, it has an increased willingness to intervene in the foreign exchange market.
Energy prices eased late in the quarter. Brent crude had averaged $100 per barrel since the Bank of England's April Monetary Policy Report, but oil prices fell to around $79 per barrel after plans for a Middle East peace deal were announced in the days before the June MPC meeting. The Bank of England's July Financial Stability Report noted that the US–Iran Memorandum of Understanding provides for a 30-day period to restore traffic in the Strait of Hormuz and a 60-day period of negotiations, and that energy prices had fallen back to just above pre-conflict levels. Euro area inflation followed, easing to 2.8% in June from 3.2% in May on Eurostat's flash estimate, as energy inflation fell to 8.7% from 10.8%.