The last major global economic crisis took place in 2008: due to the bursting of the real estate bubble in the United States, the so-called mortgage crisis subprime.
Financial systems around the world have been affected, leading to a deep liquidity crisis and indirectly causing other economic phenomena, such as a global food crisis and a deep recession.
Today, nearly 15 years later, the ghosts of a serious economic crisis reappear and have an origin: the collapse of the American bank Silicon Valley Bank.
He Silicon Valley Bank (SVB), financial entity with a large portfolio of customers including startups technology, was intervened this Friday by the Federal Deposit Insurance Corporation (CFSD) due to doubts about its liquidity and solvency.
The California Department of Financial Protection and Innovation shut down the entity and named the CFSD as custodian of bank deposits.
It all started when the firm announced last Wednesday that it expected to post losses of around 1,800 million dollars (1,704 million euros) in the first quarter of 2023, as well as its intention to carry out an accelerated equity placement of 1,750 million dollars (1,656 million euros) to clean up its capital.
Even before the federal intervention, the financial authorities of the United States were vigilant and began to closely observe the behavior of other banks. United States Treasury SecretaryJanet YellenHe said: “There are recent developments affecting some banks which I am watching very closely, and when banks suffer financial losses, that is and should be cause for concern.”
All alarms enabled
Many alarms were raised after the collapse of the SVB. Wall Street closed Friday in the red and the Dow Jones Industrials, its main indicator, fell 1.07%. Additionally, there was a 27% rise in the VIX Volatility Index, also known as the “fear meter” on Wall Street.
The main fear is that this is the prologue of a new crisis. Unsurprisingly, the SVB is considered the biggest bank failure since the 2008 crisis and one of the largest in US history.
These effects of the earthquake also reached Europe. This Friday, all the floors of the old continent trembled before the fall of the SVB. In Spain, the bankruptcy of the SVB strongly affected the banks, with falls into the Ibex 35. Banco Sabadell lost 5.11% at market close, like others like Bankinter (4.22%); Santander (4.21%); BBVA (3.41%) Unicaja (2.53%); and CaixaBank (1.8%).
Similar scenarios have been experienced in London, Milan, Frankfurt and Pariswith the main banks in red, with falls like HSBC (4.59%), Finecobank (4.58%), Deutsche Bank (6.22%) or Société Générale (4.49%).
general fear
Talk to The worldBankinter’s analysis service believes that “the problem with the SVB affair is that there are fears that the customers withdraw depositsthe risk of a possible liquidity crisis and the contagion effect on the sector”.
“Thursday’s episode needs to be put in context. SVB is a bank with a very particular profile that is dedicated to financing very young companies in the United States, therefore companies that need a lot of financing to start up and have had to face to a very sharp rise in interest rates,” he told the same media outlet. Antonio Castelo, iBroker Analyst.
Is it contagious? “In theory, yes, but in practice you have to take into account that this is something very specific to a bank of this profile in the United States. The current market does not take this into account. there will be a cataclysm of the magnitude of the previous crisisbut we must not forget that money is scary and investors may first have a reaction like the one we saw on Thursday,” Castelo adds.
And why did this happen? Sharp rate hikes could be behind. “While this seems like a limited issue, with these falls the market seems to be wondering if the pain associated with such a vertical rise in rates accumulated since 2022 is starting to spread from riskier market areas to more traditional financial areas,” he said. The world the Banca March analysis team.