ECB supervisors see no contagion to euro zone from bank turmoil, source says

FRANKFURT (Reuters) - European Central Bank supervisors meeting on Friday saw no contagion to euro zone banks from the market turmoil that has engulfed Credit Suisse and some U.S. lenders, a source said.

Investors have been fretting about the risk of a new banking crisis after the collapse of Silicon Valley Bank last week, followed this week by emergency lifelines being thrown to Switzerland's Credit Suisse and San Francisco-based First Republic Bank.

But the source, familiar with the content of the unscheduled meeting of the Single Supervisory Board, told Reuters that supervisors were told deposits remained stable across euro zone banks and exposure to Credit Suisse was immaterial.

An ECB spokesperson declined to comment.

Euro zone banks are still sitting on some 4 trillion euros ($4.25 trillion) worth of excess liquidity, which they are even keen to hand back to the ECB now that borrowing from it has become more expensive, as central bank data showed on Friday.

By contrast, Credit Suisse tapped an emergency lifeline worth 50 billion Swiss franc ($54 billion) from its central bank on Thursday.

The Swiss rescue calmed markets and emboldened the ECB to raise interest rates by another half-a-percentage point on Thursday, confounding traders' bets and sticking to its inflation-fighting efforts.

Large U.S. banks injected funds into First Republic Bank later the same day, swooping in to rescue the lender caught up in a widening crisis triggered by the collapse of two other mid-size U.S. lenders over the past week. ($1 = 0.9401 euros)

(Reporting by Francesco Canepa; Editing by Andrew Cawthorne and Alex Richardson)