FRANKFURT (Reuters) – Germany’s central bank, the Bundesbank, called a crisis meeting on Monday to assess the possible effects of the collapse of U.S. bank Silicon Valley Bank (SVB) on its home market as the European Central Bank ( BCE), for the moment, has not planned anything in this direction, according to a source.
Trapped by the accelerated rise in interest rates in the United States, SVB Financial Group, which operates as SVB, collapsed on the stock market last week after a surprise capital increase intended to make up for a loss of 1, 8 billion dollars, following the sale of a bond portfolio.
This led the American authorities to put in place emergency measures to restore confidence in their banking system, with in particular the announcement by the American Federal Reserve (Fed) of a new bank financing program intended for institutions that would in the face of customer deposit withdrawals.
Without waiting for a possible decision from the ECB, a spokesman for the Bundesbank said that the German central bank had chosen to assemble its crisis team to assess the fallout at the level of German banks and on financial markets as institutions like Commerzbank and Deutsche Bank fell Monday morning respectively by 9.6% and 5.3% with a plunge in the European banking sector of 5.01%.
Created during the last financial crisis in 2008, the Bundesbank crisis team is responsible for informing the Bundesbank council and proposing recommendations, but it does not have decision-making power.
In the euro zone, decisions are taken by national supervisors for small banks and by the ECB Supervisory Board for large banks.
A source within the ECB’s Supervisory Board told Reuters on Monday that the board had so far held no emergency meetings and had no plans to call one, with the next meeting still scheduled for 23-24 April. March.
No communication from this council or from the Governing Council of the ECB, which is responsible for the bloc’s monetary policy, is also planned.
Solicited, the spokesperson for the ECB declined to comment, while that of the Banque de France said that no crisis meeting was in progress.
The ECB Supervisory Board source added that eurozone banks were generally well funded and had hedged against the risk of an accelerated rate hike by transferring assets from their trading portfolios to their hold-to-maturity portfolios.
He also noted that eurozone banks generally had a more balanced asset mix than Silicon Valley Bank, which specializes in lending to tech start-ups, which was deemed riskier.
According to the source, there are currently no direct consequences of the SVB collapse on eurozone banks, but this could change if the effects in the United States spread to large banks.
BaFin, the German financial regulator which oversees German banks in cooperation with the Bundesbank, has announced that it will impose a moratorium on the German branch of SVB following the collapse of its parent company.
(Report Frank Siebelt, Francesco Canepa and BalazsKoranyi; with Leigh Thomas; Claude Chendjou, editing by Matthieu Protard)
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