After the bankruptcy of Silicon Valley Bank, the specter of a new financial crisis


Eurogroup (meeting of eurozone finance ministers) President Paschal Donohoe of Ireland, right, talks to Greek Finance Minister Christos Staikouras in Brussels on March 13, 2023.

A waste of time: neither the efforts and the billions deployed in the emergency over the weekend in the United States, nor the declarations of political leaders on both sides of the Atlantic were enough to appease the world stock markets, Monday 13 March, as if investors suddenly became aware of the threats that could trigger another major financial crisis.

By guaranteeing all of the deposits of Silicon Valley Bank (SVB), bankrupt after a massive movement of withdrawals from its customers, and those of Signature Bank, placed under guardianship, while mobilizing 25 billion dollars (23.3 billion euros) to meet the possible needs of other establishments, the American Federal Reserve (Fed, central bank), the Treasury and the Federal Deposit Insurance Corporation (FDIC) sought to avoid the worst: a rapid and uncontrolled contagion to the rest of the financial system, starting with the regional banks, considered to be more fragile.

Political leaders took over on Monday, with President Joe Biden assuring that Americans could have confidence in their banks, while euro zone finance ministers, meeting in Brussels, took turns in front of the microphones to try to reassure individuals, companies and investors.

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“We do not see any risk of contagion for France “, insisted the French Minister, Bruno Le Maire, highlighting the diversification of French banks, which according to him the “protect”and a monitoring system ” solid “.

The memory of the “great financial crisis” of 2008

Nothing worked: at the close, the Paris Stock Exchange lost 2.9%, that of Frankfurt 3.04% and that of London 2.58%. European banking stocks, which had already suffered on Friday, amplified their fall: BNP Paribas lost 6.8%, Societe Generale 6.2%, Credit Suisse 9.6% and Commerzbank 9.9%. In two sessions, the benchmark index of listed European banks dropped 10.2%.

The day ended better on Wall Street, with a decline limited to 0.2% for the S&P 500 index, but the banking compartment still lost nearly 11% and the drop in the price of First Republic Bank, judged at turn vulnerable, reached up to 79% in session.

Fleeing the risk on the stock market, many investors have taken refuge in the government bond markets, deemed to be safer, causing their yields to fall sharply, which move in the opposite direction to prices: that of the German two-year debt, benchmark for the euro zone, fell by nearly half a percentage point on the day.

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