The latest shock waves on the international financial markets after the difficulties of the US start-up financier SVB are exaggerated from the point of view of banking experts. The events in California are a "prime example of an inappropriate panic reaction on the part of the stock markets," said Rainhard Schmidt of the Goethe University in Frankfurt/Main on Saturday of the German Press Agency.
"The price drop was inappropriate because the Silicon Valley bank pursues a very special business model that really bears no resemblance to that of almost all banks in most countries," said the economics professor. There is therefore no systemic risk and no reason for further-reaching fears. "The rapid, extensive price recovery was fully justified."
Financial market expert Wolfgang Gerke made a similar statement. "The SVB Bank does not endanger the international capital market. Your cluster risk from start-up financing is atypical for the banking sector," said the President of the Bavarian Financial Center of the dpa. "German banks are in a stable position with their equity buffers and business models. Dangers in the USA come from the large bond portfolios of smaller banks," emphasized the economics professor.
Course crash on Thursday
The US money house 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 company FDIC on Friday. The SVB, founded in 1983, had seen huge withdrawals of funds in the past few days as a result of liquidity concerns.
SVB 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 exchange. The SVB caused a stir on Thursday when it surprisingly announced it would issue shares after a major sale of assets resulted in a loss. The shares posted a drop of a good 60 percent on Thursday alone.
The voluntary resolution of the US crypto bank Silvergate Capital had also sent shock waves 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 trading. However, Silvergate announced that it would repay all customer deposits.
High interest rates pose problems for tech companies
The fear of loan defaults in the banking sector had intensified again, the problems of the US banks also caused uncertainty on the European stock exchanges and caused the prices of Deutsche Bank and Commerzbank to drop significantly at times.
From the point of view of the Harvard professor and former US Treasury Secretary Larry Summers, great concerns about the risk of infection are exaggerated. On Bloomberg TV he spoke of an "overreaction". As long as the crisis at SVB is managed properly and customer funds are paid out, no systemic risks for the banking sector can be expected.
Technology companies are particularly suffering from the current high interest rates because they make their refinancing more difficult. There is also the risk that loans can no longer be serviced. High interest rates also depress company valuations, since in such an environment the profits forecast for the future are worth less from today's perspective. Silicon Valley Bank customers from the tech industry had recently withdrawn deposits because they needed liquidity themselves.
The high price losses of many bank stocks in the wake of SVB had clouded the mood for the industry as a whole. Thursday saw the biggest sell-off in the banking sector in almost three years, as the KBW Bank Index tumbled 7.7 percent. On Friday, the important industry barometer lost 3.9 percent.
"Victims of the Same Phenomenon"
Silvergate and SVB "are indeed victims of the same phenomenon, as US monetary tightening skims the foam from the most surplus parts of the economy - and it's hard to find more surplus than in crypto and tech startups" , Vital Knowledge analyst Adam Crisafulli said on Friday.
"The Silicon Valley Bank still seems to be an isolated case," emphasized fund manager Thomas Altmann from asset manager QC Partners. "But previous crises have shown how great the risk of contagion among banks is. This is why investors are reacting so sensitively to the news from California." Another dealer spoke more of a mood dampener. However, the problems of the SVB are not a direct indicator for the sector.
Joachim Klement from the investment bank Liberum Capital spoke of growing fears of a credit crunch. However, 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.