Market-friendly outcome, first thoughts The US authorities have moved swiftly and decisively in response to two US bank failures, delivering a market friendly outcome. This report is our first take on events over the weekend, considering the immediate implications for markets and the longer-lasting ripple effects for the banking system. The cavalry has arrived The US authorities have not pulled any punches. SVB depositors - both insured and uninsured - will be made whole today, which should reduce ''deposit flight'' risk. A new Bank Term Funding Program (BTFP) backstops the system''s liquidity and removes the ''vicious cycle'' of underwater securities books harming solvency ratios. This will likely leave scars So, can the market ''move on'' and chalk this down as an idiosyncratic problem, now solved? We don''t think so. Credit creation will likely to slow now, as US banks ease their foot off the deposit-less loan growth of the past year. We look at why deposit beta will rise further, why the Fed may want to reverse recent de-regulation, and why US bank levies may well need to rise. For the system, we ponder whether new-found ''reserve-hoarding'' could impede future QT. Sacrilege In the past 15 years, to suggest European over US banks was sacrilege. What about now? Europe has deposit inflows, lower deposit beta and has recognised bond revaluations in CET1 properly. European deposit levies should now fall, whilst the levies could rise in the US. Europe is winding its emergency funding scheme down, as the US launches a fresh one. The profitability and buyback ''gaps'' are narrowing, valuations are more compelling and EPS revisions are in your favour. Food for thought. Our top EU bank picks are: Caixabank, Unicredit, Commerzbank, Erste, Bank of Ireland and Bankinter.