Americans can”trust“into a banking system”solid“, assured Monday March 13 Joe Biden, while European officials are trying to reassure on the risk of contagion to global finance from the collapse of the Californian bank SVB.
>> Wall Street ends in sharp decline, concerns around the SVB bank
>> US authorities take control of Silicon Valley Bank
>> US authorities put SVB bank up for auction, want to avoid contagion
| Customers outside Silicon Valley Bank headquarters in Santa Clara on March 13. |
| Photo: AFP/VNA/CVN |
“We won’t stop there“, assured the American president, Monday morning March 13, from the White House, seeking to fuel confidence, the only bulwark against a large-scale contagion of the troubles of Silicon Valley Bank (SVB).
On Friday, March 10, the American authorities placed this bank, which is close to technological circles, under supervision, and put it up for auction with the aim of finding a buyer as quickly as possible.
They also intervened hastily in the face of the bankruptcy of two smaller establishments, Signature Bank and Silvergate Bank, known for its privileged links with the cryptocurrency community.
Joe Biden promised that American taxpayers would not be put to work, but warned that investors and shareholders will not be “protégésof their losses.
He also said he would ask Congress to legislate to “to strenghten“Banking regulation, toughened after the Lehman Brothers debacle in 2008 but then eased by his predecessor Donald Trump.
“No direct contagion”
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| US President Joe Biden at the White House on March 13. |
| Photo: AFP/VNA/CVN |
The American Central Bank (Fed) has announced that it will examine the conditions of supervision and regulation of SVB, the events requiring “an in-depth, transparent and rapid analysis“, according to Fed Chairman Jerome Powell. The results will be published on 1is May.
On the other side of the Atlantic, European politicians are also trying to reassure about the risk of contagion to the entire banking sector.
“There is no direct contagion and the possibility of an indirect impact is something we need to monitor, but at this time we do not see any significant risk.“, declared in Brussels the European Commissioner for the Economy, Paolo Gentiloni, before a meeting of finance ministers of the euro zone.
“Calm down, calm down, and look at reality!“, launched to the investors the French Minister of Economy, Bruno Le Maire, considering that “the reality is that the French banking system is not exposed to the SVB. There are no links between the different situationsin the United States and Europe.
Wall Street ended on a mixed note on Monday March 13, after starting in the red. The regional bank First Republic nevertheless lost nearly 62% at the close.
European markets also picked up a few colors after a low in the early afternoon, but ended down sharply. The Credit Suisse share, perceived by investors as a “weak link” of the Swiss banking sector, in particular suffered strong shocks.
Guaranteed withdrawals
On Sunday March 12, US authorities announced that they would guarantee the withdrawal of all SVB deposits and allow access to all Signature Bank deposits. In addition, the Federal Reserve – the Fed – has agreed to lend the necessary funds to other banks that may need them to honor their customers’ withdrawal requests.
London, for its part, announced that the British branch of SVB had been sold to the British banking giant HSBC, for a symbolic pound.
“SVB UK customers will be able to access their deposits and banking services as normal from today“, assures the British Treasury.
The authorities want at all costs to avoid a panic on the markets on Monday March 13 and mass withdrawals from bank customers, a “bank run” with potentially devastating effects. The SVB debacle illustrates the disruption of the entire American banking system in the face of Fed monetary tightening.
Interest rate hikes in the United States have encouraged customers to put their money in financial products that pay better than current accounts, drying up a crucial source for the cash-hungry new technology sector.
The race against 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.
AFP/VNA/CVN