The recent shock waves on the international financial markets following the difficulties of the US start-up financier SVB are exaggerated from the point of view of banking experts. The events in California were a "prime example of an inappropriate panic reaction of the stock markets," said Rainhard Schmidt of the Goethe University in Frankfurt / Main on Saturday the German press Agency.
"The fall in prices was inappropriate because Silicon Valley Bank has a very special business model that really has no similarities to those of almost all banks in most countries," said the economics professor. There is therefore no systemic risk and no reason for further fears. "The rapid, extensive price recovery was fully justified."
Financial market expert Wolfgang Gerke expressed a similar opinion. "SVB Bank does not endanger the international capital market. Their cluster risk from start-up financing is atypical for the banking sector," the president of the Bavarian financial centre told dpa. "German banks are stable with their capital buffers and business models. Dangers in the USA threaten from the large bond portfolios of smaller banks," emphasized the economics professor.
Closed and under state control
The US financial institution Silicon Valley Bank (SVB), which specializes in start-up financing, has been temporarily closed and placed under state control after a failed emergency capital increase. This was announced by the US deposit insurance FDIC on Friday. At SVB, which was founded in 1983, there had been immense cash withdrawals in recent days in the wake of liquidity concerns.
SVB's shares were suspended from trading on Friday after a price slide due to the acute emergency. Other banks also came under considerable pressure on the stock market. The SVB had already caused unrest on Thursday when it surprisingly announced the issuance of shares after a major sale of assets led to a loss. The shares recorded a minus of a good 60 percent on Thursday alone.
The voluntary liquidation of the US crypto bank Silvergate Capital had also sent shockwaves through parts of the financial sector. Silvergate had already warned in the wake of the bankruptcy of the crypto exchange FTX that it might have to stop the business. However, Silvergate announced that it would repay all customer deposits.
The fear of credit defaults in the banking sector had intensified again, the problems of US banks also caused uncertainty on the European stock markets and caused the prices of Deutsche Bank and Commerzbank to fall significantly at times.
Experts do not fear any risks
From the point of view of Harvard professor and former US Treasury Secretary Larry Summers, great concerns about the risk of contagion are exaggerated. On Bloomberg TV, he spoke of "overreaction". As long as the crisis at SVB is managed sensibly and customer funds are paid out, no systemic risks for the banking sector can be assumed.
Technology companies are particularly affected by the current high interest rates, as this makes their refinancing more difficult. In addition, there is a risk that loans can no longer be serviced. A high level of interest rates also puts pressure on the valuation of companies, since in such an environment the profits promised for the future are worth less from today's perspective. Customers of Silicon Valley Bank from the tech industry had recently withdrawn deposits because they needed liquidity themselves.
The high price losses of many bank shares in the wake of SVB had strongly clouded the mood for the industry as a whole. On Thursday, there was the biggest sell-off in the banking sector in almost three years, as the collapse of the KBW Bank Index by 7.7 percent showed. On Friday, the important industry barometer lost 3.9 percent.
Silvergate and SVB "are indeed victims of the same phenomenon, as U.S. monetary tightening siphons off the foam from the parts of the economy with the most surpluses — and it's hard to find more surpluses than in crypto and tech startups," analyst Adam Crisafulli of Vital Knowledge said Friday.
"Silicon Valley Bank still seems to be an isolated case," said fund manager Thomas Altmann of asset manager QC Partners. "But previous crises have shown how great the risks of contagion among banks are. That's why investors are so sensitive to the news from California." Another trader also spoke of a mood dampener. The problems of the SVB, on the other hand, are not a direct indication for the sector.
Joachim Klement of the investment bank Liberum Capital spoke of growing fears of a credit crunch. However, even he does not believe that the situation of the SVB poses an immediate threat to the European banking system. The US institute has a very special business model and specializes in venture capital and the financing of young growth companies. This is quite unique within the banking scene. Non-performing loans are likely to increase this year, but the reserves of banks in Europe and the US are sufficient to absorb problems.