The failures of Silicon Valley Bank and Credit Suisse have made a global economic slowdown more likely and European governments should be ready to support businesses as credit conditions tighten, veteran Italian banker Corrado Passera has said.

“The banking crisis in the United States and the situation at Credit Suisse have increased the risk of recession,” said the 68-year-old, who left the top job at Italy’s largest bank Intesa Sanpaolo to serve in government at the height of the country’s debt crisis in 2011.

Passera, who is now chief executive of Illimity, a digital bank he founded five years ago, added he was most worried about the impact on small and medium-sized businesses. Governments should be on alert “to compensate for lack of credit availability, because problems in this area of the market will translate to the rest of the economy”.