Banking crisis in the United States: Europe fears contagion from Silicon Valley Bank

The European operations of Silicon Valley Bank, the 16th US bank now closed and placed under the administration of the authorities, which guarantee all deposits, they seem very limited to lift the wind of fear they are stirring up. Even if you take into account the fall of the New York Signature Bank.

The bank, an almost unknown in much of Europe, it only has four small branches in the old continent: in Germany, Denmark, the United Kingdom (which will pass into the hands of HSBC in exchange for one pound, the price of a pack of garbage bags) and Sweden.

But European governments are already studying the impact its fall could have on sectors such as financing of tech startups or in pension funds.

The Bloomberg agency reported on Monday that it has managed to identify a handful of companies, mainly in the technology sector, which obtain funding from Silicon Valley Bank and pointed to Polish video game maker Huuuge.

Another form of involvement would be Sweden’s largest pension fund, which would be the fourth largest shareholder of the US bank. But that exposure would be limited to $605 million.

Despite this limited activity in Europe, stock markets in the old continent have plunged sharply on fears that the Silicon Valley Bank don’t be the only bad apple. Frankfurt, Paris and London lost almost 3%, Madrid was close to 3.5% and Rome exceeded 5%.

Among the banks, the correction suffered by commerzbank Germany, which loses 13.0%. The German financial giant also suffered substantial losses German bank (-4.3%), the French BNP Paribas (-6.2%) and its compatriot Société Générale (-5.8%), the Spanish Santander (-7.2%) and BBVA (-8.0 %). The Italian banking system was moving in the same direction.

dollar, shelter

The euro also fell slightly against the dollar from 1.069 on Friday to 1.067 at noon on Monday. United States currency it is an active refuge for European investors. The price of gold has also risen and the interest that European national treasuries had to offer to place their bonds has decreased, another symptom of a movement of fear seeking safe assets.

A source of clarion in the European Commission, which was already close to leadership posts in the executive arm of the European Union when the 2008 financial crisis erupted, said this on Monday: “We recall that in 2008 the European Union saw the fall of Lehmann Brothers and his first reaction was to ask that the United States sweep the garbage so that it would not stain Europe. but europe it suffered that crisis more than the United States. Silicon Valley Bank is not Lehmann Brothers nor does it have as many operations in Europe, but it seems clear that this is the case It’s not even the corner store.

European authorities watched US regional banks on Monday morning they were preparing to lose above 50% of its stock price as soon as Wall Street opened. If each of them can be considered small, together they start making a snowball.

Shareholders and depositors flee small banks for the safety of larger ones, a move unheard of in Europe, where hopefully the crisis will not jump the Atlantic.

For European media, the implications of the Silicon Valley Bank fall are one of the great economic news so far this year. All online openings of the economic ‘Financial Times’ is dedicated to the subject.

The next few days will decide if it was a passing fever or if the northern powers get into another financial crisis because they didn’t closely follow the risks their banks were running.

The finance ministers of the Eurozone, meeting this Monday in Brussels, They have urgently put the issue on their agenda. The messages were all similar: there’s no risk, there’s no exposure, there’s no reason to be afraid, much less panic.

Brussels, especially for clarion