MILAN. The of Silicon Valley Bank is shaking the markets. Shortly after 1:00 pm and awaiting the opening of Wall Street, Milan lost four percentage points, sunk by the banks. Are Italian savers safe? «The Svb case is a separate case with its own characteristics that limit its effects. I don’t see the risk of contagion also because in Europe the rules are stricter and therefore the banking world is solid» reured Giovanni Sabatini, general manager of ABI in an interview with La Stampa.
The fear is that the bankruptcy of the US bank specializing in startups could also infect Europe. “The collapse of Silicon Valley Bank should not infect the European banking sector which generally has a deposit base less concentrated in one sector. SVB was disproportionately tied to tech startups, Citi analysts say.
European banks continue to have relatively healthy deposit flows, operate with large cash pools and remain well capitalised. It is important to note, the experts add, that European banks continue to record system-wide deposit inflows, relative to US outflows, even as growth is starting to slow, especially among commercial customers.
Crac of Silicon Valley Bank, Europe in the field: “But the exposure of our banks is very limited”
Filippo Alloatti, Head of Financials (Credit) of Federated Hermes analyzes that the problem of SVB is more a problem of Silicon Valley than of the bank. The expert explains that «Emergency measures have been taken to protect depositors of SVB and Signature Bank New York (SBNY) by invoking the systemic risk exception, which allows regulators to guarantee uninsured deposits. The Fed’s Bank Term Funding Program (BTFP) has been announced, offering loans up to one year, accepting qualified collateral at par to allow banks to build cash from their bond portfolios without acknowledging unrealized losses. There are no listed European banks with a similar business model. Central banks have extensive tools to shore up institutions with liquidity, including entire banking systems.
Silicon Valley Bank, the last days in the bank between employee bonuses and maxi share sales
The alarm remains high and the Svb case immediately triggers new ones bells
For Emiliano Carchen, Financial Services partner of Oliver Wyman “The failure of the Silicon Valley Bank is not a danger for European banks, but it warns us against macroeconomic changes”. In practice, the bankruptcy of SVB can help us understand the extent of the change that the macroeconomic scenario is inducing on the banking system and underlines the importance that the financial dynamics and the models of demand items, IRRBB, ALM, funding strategy etc . they will have in the coming years to preserve the excellent profitability of 2022. Addressing this change will require improving the integration between industrial and financial planning and having a more fluid dialogue between the business, risk and finance functions with respect to the scenario and possible strategies response (for example by adopting “stress” scenarios commonly considered credible by these functions).