In this paper we exploit the price differential of CDS contracts written on debts with different seniority to measure the implicit government guarantees enjoyed by European financial institutions over the period 2005-2013. We find that the guarantee increases substantially during the global subprime crisis and peaks at an average of 89 basis points in September 2011, during the European sovereign debt crisis. Implicit support is higher for banks than insurance companies. Our analysis suggests that Eurozone financial firms benefit more from implicit guarantees than their non-Eurozone counterparts within the European Union. We observe that the aggregate guarantee implicitly offered by a government positively “Granger causes” the sovereign’s default risk. Further, our analysis reveals two offsetting effects from sovereign default risk on implicit guarantee. We also find evidence that the phasing in of Basel III rules does not appear to have reduced the implicit guarantees available to major financial institutions in Europe.