• Why are Spanish banks the hardest hit on the stock market after the collapse of SVB?
  • Banking Key to the Credit Suisse crisis: Is Silicon Valley Bank European?

The financial storm that began in the United States appeared to subside on Tuesday, but it was only taking its time to cross the Atlantic and fall in full force in Europe. The drift of a large regional entity like Credit Suisse did the rest. Investors' fears of contagion after the collapse of Silicon Valley Bank (SVB) have crystallized in the markets and are beginning to shift pressure to supervisors and regulators for fear of a repeat of a global banking crisis.

Analysts and experts insist there is no reason to think of a new debacle of the magnitude of 2008 and Lehman Brothers, but the daily stock market crashes around the world do not support their messages. The crisis of confidence in the system is already a reality. The doubts about any entity are examined with magnifying glass in case they could be the canary in the mining sector and trigger a domino effect, hence the alarms were activated yesterday with Credit Suisse.

The shares of the large Swiss bank - the second most important in the country - collapsed 24.24% on the Zurich stock exchange, although they exceeded 30% decline in a sign of the delicate situation it is going through. The lack of support from its main shareholder, the Saudi National Bank, unleashed the massive flight of investors after the president of the Saudi institution, Ammar al Khudairy, confirmed to Bloomberg that he will not carry out more capital injections to the entity. "We can't because we would exceed 10% of the shareholding, it's a regulatory issue," he said. Investors interpreted his words as a withdrawal of support and panic spread quickly.

Banks across Europe suffered a new black day in the stock markets and deepened even more in the losses they endure since last Friday the collapse of SVB became effective. In Spain, the entities present in the Ibex 35 accumulate since then a decrease of 24,023 million euros in their capitalization value and, among them, Sabadell continues to concentrate the worst results. In these five days, its titles have lost 21.88%; Only yesterday they left 10.54% and are on the verge of losing the level of 1 euro that has cost them so much to reconquer.

The result was no better for the rest of the banks in the Ibex 35: BBVA fell by 9.6%; Santander, 6.89%; CaixaBank, 6.72%; Bankinter, 6.46% and Unicaja, 6.06%. In the rest of Europe, the balance sheet followed the same trend: Société Générale fell by 12.18%; BNP Paribas, 10.11% and Crédit Agricole, 5.21%. ING was down 9.58%; Commerzbank, 8.71%; Deutsche Bank, 9.25% and Unicredit, 9.06%.

Despite this, financial sources consulted by EL MUNDO consider that no parallels can be drawn between the case of SVB and European banks. "The situation of SVB and US banks should not be extrapolated to Europe where banks have solid solvency ratios, well above the legal minimum and have a solid balance sheet structure and more diversified sources of financing," they say.

The same sources believe that this argument is also applicable in the case of Spanish banks. "Its asset structure has a reduced concentration in fixed income, with a percentage of 12.7% on the balance sheet, with a majority weight of credit to the private sector. In addition, it has a large and diversified customer base (38% of liabilities are household deposits and 16% are deposits from non-financial companies), while in the case of the SVB the financing was concentrated in deposits from technological startups.

The ECB's silence

The case of Credit Suisse is different. The entity has been going through a triple crisis of confidence, reputation and results for several years that have now been aggravated. The bank also suffered last year the withdrawal of liquidity worth 123,200 million Swiss francs (126,000 million euros). This loss of liquidity is critical and becomes important after the SVB episode. According to Jérémie Boudinet, Head of Investment Grade Credit at La Française AM, Credit Suisse has been suffering from deposit outflows and has a client base composed largely of individuals and sophisticated companies, "who are considered less sticky [loyal] depositors than retail clients. The next few months will be key for the bank, which absolutely needs to stabilize its deposit base, even at the cost of its profitability, which is already severely depleted anyway."

But Credit Suisse may not have that much time. Yesterday he asked for help from the Swiss central bank and the regulator Finma and both responded with a statement assuring that the entity "satisfies the capital requirements" and that it will provide liquidity "in case of need".

Unlike them, the European Central Bank (ECB) has opted for silence in recent days and perhaps that has not helped to calm the markets either. Quite the opposite, which is why the markets are now looking particularly closely at Frankfurt. The Eurobank holds a new meeting in which the institution is expected to announce another rate hike, although the real focus of interest will be what its president, Christine Lagarde, says – or does not say.

The institution is obliged to send a message that transmits calm and security to the markets, banks and consumers, who are beginning to worry about the stock market debacle. Any speech or any move that was not in that direction would only make the situation worse.

While waiting for the ECB, some European leaders have tried to step up to defend the soundness of their respective banking systems. This is the case of the President of the Spanish Government, Pedro Sánchez, who yesterday took advantage of his press conference in Lanzarote to ensure that "the Spanish financial sector is above the average liquidity and solvency". According to Sánchez, after the previous crisis "lessons have been drawn" and there is no longer the deregulation that was "suffered", so it is important, he said, to vindicate the measures taken and the reinforced supervision system.

In France, Prime Minister Élisabeth Borne also appealed to the role of the Swiss authorities to "solve" the situation of Credit Suisse and stressed that "French banks are not exposed to any risk after the bankruptcy of SVB".

At the moment a massive withdrawal of deposits between the entities has not been detected, but fear and uncertainty begin to permeate among customers. Some banks, such as ING, have begun sending letters to individuals to explain what happened with SVB and to dispel possible "doubts about the soundness of the banking sector", as well as the effects of rapid rate hikes on their balance sheets.

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