After the collapse of Silicon Valley Bank (SVB), the question arises as to the consequences for the Financial Centre Frankfurt. The institute, headquartered in California, has also had a headquarters in Frankfurt for five years. The German headquarters are located on Guiollettstraße in the Westend, from where the company operates credit but, unlike its American parent, no deposit business. On Monday, the banking supervisory authority Bafin said that the bank's German subsidiary had "no systemic relevance" and that the company's plight posed "no threat to financial stability".

Daniel Schleidt

Coordinator of the business editorial department in the Rhein-Main-Zeitung.

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Nevertheless, the regulator ordered a moratorium on Silicon Valley Bank Germany on Monday, closing the bank to customer traffic in order to secure the assets in an orderly process, the Bafin said. Accordingly, the company can no longer grant any more loans, but the borrowers' installments must continue to be serviced. The company's customers in Germany include the cooking box supplier Hellofresh and the air taxi manufacturer Lilium.

Risks for start-up loans

Oliver Geiseler, banking expert at the Frankfurt-based management consultancy Capco, warns of consequences for the start-up scene, also in Germany. After all, he does not expect the big banks to simply fill the gap in growth financing created by the failure of Silicon Valley Bank. SVB is "a very unique bank" whose focus on growing tech companies can be highly profitable, "but also has a high risk". Now the risks for start-up loans could be reassessed. "The good start-ups will stay, but the shaky ones won't," says Geiseler.

However, Sebastian Schäfer, head of Frankfurt's Tech-Quartier business incubator, does not fear any immediate consequences of the SVB bankruptcy for start-ups in the region. The bank's business model primarily provides for venture debt as a form of financing, i.e. growth financing, which rather uses growth fantasies to decide on an investment instead of existing revenue figures. There are not nearly as many such start-ups in the region as, for example, in Berlin, "it is less relevant for the Frankfurt ecosystem".

Most recently, the balance sheet total of the German subsidiary amounted to 789.2 million euros, according to Bafin, which corresponds to about the size of a smaller Volksbank. Overall, the company, which sees itself primarily as the principal bank of the technology sector and for up-and-coming start-ups in the growth phase, has total assets of around EUR 200 billion. By way of comparison, Hessische Landesbank Helaba recently reported total assets of EUR 213 billion.

Consequences unlikely after Lehman collapse

Within a few days, Silicon Valley Bank had lost the confidence of investors and customers last week, and on Friday last week, the US deposit insurance Federal Deposit Insurance Corporation took control and closed the bank.

The bankruptcy has thrown the financial sector into turmoil, after all, it brings back memories of the financial crisis about 15 years ago. Experts, however, consider similar consequences as after the collapse of the investment bank Lehman Brothers unlikely. "Politics, central banks and financial market participants have learned," wrote Commerzbank expert Ulrich Leuchtmann in a market commentary. Above all, there are means to contain such a crisis today, which did not exist in 2008 – which is why the risk of contagion is lower than it was then.

At the weekend, the American government announced the protection of all deposits at the bank. But it is anything but certain that the rescue operation will work, says Jochen Stanzl, chief analyst at the Frankfurt-based trading house CMC Markets: "The market suspects that the problems that have become visible at SVB are also in other balance sheets, including those of the big players."