The bankruptcy of a bank that until a week ago few knew of its existence, the Silicon Valley Bank (SVB)followed by the intervention of another US entity, signature, have put tension on world stock markets. It is premature to assess whether it is an overreaction and the waters will gradually return to their course, or if, on the contrary, there are reasons for concern. What is certain is that, regardless of the many analyzes and market studies that support financial operations, fear is also a powerful decision factor, and what is happening these days is an example of this. Halting this state of mind is the main objective of the authorities on both shores of the Atlantic to stop contagion throughout the financial system.
The fact that the SVB was an entity of not a very large dimension and with an activity very focused on the technological sector leads one to think that the problem need not affect other banks with more diversified portfolios. However, it is convenient to dwell on the reasons for the collapse, to take note. According to analysts, the SVB made a strong commitment to buy US Treasury bonds, to the point of accounting for more than half of its assets, an asset that lost value when interest rates rose. When customers tried to withdraw their money en masse, the bank had to sell that government debt at a loss, causing a crash that led to federal intervention. Surely large banks are not as exposed to risk as SVB was, but the rise in rates can also affect them. It is not surprising, then, that the Spanish vice president Nadia Calvinoafter sending a message of calm guaranteeing the good health of Spanish banks -as did other European finance ministers-, asked for extreme “prudence” and “watch monetary policy”. In other words, that the rise in rates that the Fed and the ECB are carrying out to contain inflation be moderated.
The European stock markets closed in red (the Ibex lost 9,000 points on Monday and fell 3.51%), while Wall Street seemed to take a breather at the opening. maybe the words of Joe Biden achieved the expected effect of imposing calm. The president of the United States was very correct in the speech he gave at the White House, in which he insisted that the banking system is safe, that taxpayers will not pay any bailout, that the managers of the intervened banks will be fired and that customers Banks have their deposits guaranteed up to $250,000, although investors will lose their money because they took the risk. “This is how capitalism works,” he stressed. Although this requires security mechanisms, some of which were deregulated by Trump, something that Biden promised to reverse. The promptness of the US authorities It has been key, as is the European response. The purchase of the British subsidiary of SVB by HSBC, sponsored by the government and the British central bank, was also a movement to stop the bleeding. The efforts to keep the SVB crisis from what it is, the result of mismanagement, are notorious. What happens in the next few days -with special attention to the markets, the inflation data and the future decisions of the Fed and the ECB- will determine if the objective has been achieved.