SVB, three letters that thrill the global economy. The closure of the Californian bank is the biggest bank failure in the United States since the 2008 financial crisis. Two other American establishments have already closed in turn. But will the movement cross the Atlantic? This Monday afternoon, the bankruptcy had repercussions on the share prices of other American regional banks. For example, First Republic Bank, a California bank, the 14th largest institution in the United States with more than $200 billion in assets, saw its shares fall by more than 60%.
A different situation from 2008
Experts are now scrutinizing a possible effect on the largest, national banks, and therefore the famous domino effect. “The only problem is that we don’t know everything right now. I think we have to be honest, we don’t know what the ramifications of this bank are with other American banks. If big American establishments are concerned, so there is indeed a danger,” said economist Marc Touati.
On the other hand, observers are unanimous: the situation is very different from that of 2008. Today, the case of Silicon Valley Bank is limited to the United States and to the new technologies sector. “The stock market reacts because it understands that it is the end of the digital bubble”, explains the economist. “But there is still good news: we are not facing Lehman Brothers, which was the investment bank of the whole world. Almost all the banks in the world were linked to it,” he adds.
Credit Suisse, the subject of concern in Europe
This did not prevent the markets from panicking on Monday. In Europe, the stock markets all closed down and banking stocks were the most affected. BNP Paribas and Société Générale saw their prices plunge by 6%. But the main reason for concern in Europe is not directly related to the situation of the SVB. On the European continent, it is Credit Suisse, perceived as the weak link in European finance, which has been the most heckled. “It’s a much bigger danger. Credit Suisse also has great difficulties and it’s a global bank,” warns Marc Touati. The bank would not be exposed to the Silicon Valley Bank, but the nervousness of investors could weaken this establishment a little more.
In 2022, Credit Suisse recorded a loss of 7.4 billion euros and, on Monday, the share price fell by 10%.