Authorities took action in the United States and Europe to protect deposits at failed US bank Silicon Valley Bank (SVB) and reassure markets and individuals alike, even as banking stocks under pressure on Monday reflected lingering concern.
The star indices of the main European markets indeed yielded more than 2% around 6:15 a.m. EDT, while banking stocks suffered sharp declines.
The action of Standard Chartered thus yielded 5.24% of its value and that of Barclays 4.71% on the London Stock Exchange. Credit Suisse lost more than 14%, hitting a new historic low.
A litany of companies have issued statements to the London Stock Exchange to reassure investors regarding their exposure to SVB.
Sunday, the American authorities announced that they were going in particular to guarantee the withdrawal of the entirety of the deposits of the Californian bank in bankruptcy. The American authorities will also allow access to all the deposits of another establishment, Signature Bank, which has been closed automatically by the American regulator.
In addition, the Federal Reserve (Fed) — the US central bank — has agreed to lend the necessary funds to other banks that need them to honor withdrawal requests from their customers.
London for its part announced that the British branch of SVB had been sold to the British banking giant HSBC, which specified that it had acquired it for a symbolic pound.
“SVB UK customers will be able to access their deposits and banking services as normal from today,” the UK Treasury added in its statement.
Avoid contagion
The authorities wanted at all costs to avoid a panic in the markets on Monday and mass withdrawals of bank customers, a “bank run” which might have had a devastating contagion effect on the sector.
The strong measures deployed by the American authorities testify to the turbulence which threatens the American banking system, disturbed by the forced monetary tightening of the Fed.
These increases in interest rates have in particular encouraged customers to invest their money in financial products better remunerated than current accounts and have shaken up the sector of new technologies, hungry for cash.
The wave of bank withdrawals that followed caused the default of three banks last week: SVB, Signature Bank but also Silvergate Bank, smaller but known for its privileged links with the cryptocurrency community.
“The banking system is much more resilient and has a much better foundation than before the financial crisis” of 2008, hammered a Treasury official. All of the measures unveiled on Sunday were “necessary to address the systemic risk that we have observed in the financial markets”, he argued.
The solution announced on Sunday protects depositors, but shareholders of SVB and Signature Bank “will lose everything,” said a Fed official.
As for US President Joe Biden, he said he was “firmly determined to hold accountable those responsible for this mess”.
Mr. Biden assured that “the American people and American businesses (can) have confidence that their bank deposits will be there when they need them”.
At the same time, the American authorities put SVB up for auction with the aim of finding a buyer as soon as possible.
The race once morest time this weekend recalls September 13 and 14, 2008. The American authorities had failed to find a buyer for Lehman Brothers and refused to intervene, pushing the bank to file for bankruptcy, with dramatic consequences for the sector. finance and the global economy as a whole.
In Germany, banking supervisor Bafin assured Monday that the bankruptcy of SVB did not constitute “a threat to the financial stability” of the country. French Economy Minister Bruno Le Maire also said French banks were not in danger. “I don’t see any risk of contagion,” he said.
French banks “are not exposed to a single sector of activity” like the SVB, which was almost exclusively exposed to the new technologies sector, he underlined Mr. Le Maire.
Many expressed concern regarding the repercussions of the SVB bankruptcy on the technology sector, American but also beyond. SVB boasted that its clients were “nearly half” of technology and life sciences companies financed by American investors.
For its part, the sector association Tech UK believes that the sale of SVB UK to HSBC will “relieve” the “tech sector ecosystem”.
