Baptiste Morin, edited by Romain Rouillard
modified to
07:33, March 16, 2023
Since the bankruptcy of the American bank SVB, European banks have trembled at the specter of a financial crisis. This Wednesday, the stock market value of Credit Suisse fell, dragging in its wake several French banks. But the latter now have much stronger kidneys than in 2008.
It all started with a statement Wednesday morning from the Saudi National Bank. The Saudi establishment announced, five days after the bankruptcy of the American bank SVB, that it would not increase its support granted to Credit Suisse, of which it is the largest shareholder. The Swiss bank, already mired in many difficulties, has therefore seen its stock market value fall by 25%. A reversal which brought in its wake certain French banks including BNP Paribas and Société Générale. The action of the two institutions fell 11% on Wednesday.
For the first time since the 2008 crisis, European banks are living in fear of a financial crisis. Nevertheless, 15 years later, they appear much better armed than they were at the time. Banking regulations have in fact become considerably tougher and European banks have had to take measures to be able to absorb the effects of a shock in the short and long term.
Since 2008, banks must reduce their dependence on each other
Concretely, this can mean more equity in the event of defaulted loans or even more liquidity in the event of a wave of hasty withdrawals. It is this last phenomenon which was at the origin last Friday of the bankruptcy of SVB. “Liquidity is a bit like the gasoline you put in the engine. You may have a big engine, but if you don’t have any gasoline in it, you’re not moving forward. The bank can simply stop because it does not have the liquidity to meet the commitments it has made and which may be very short-term”, indicates Frédéric Lacroix, lawyer, specialist in banking law and partner of the international business firm Clifford Chance .
Very concretely, BNP Paribas and Crédit Agricole each have more than 460 billion euros available immediately. And after the 2008 crisis, the banks also had to reduce their dependence on each other. What stem, in principle, the famous domino effect in the event of a crisis.