March 10 (Reuters) – SVB Financial Group’s difficulties, which are rocking the banking sector on both sides of the Atlantic, are not a “systemic problem” and the contagion effect should be limited on European banks , estimate Friday in a note the analysts of Exane.
SVB, which specializes in venture capital financing, announced a surprise capital increase to deal with a liquidity risk, which sent shock waves Thursday evening on Wall Street which spread to Europe on Friday.
However, Exane believes that greater systemic risk is unlikely, as SVB’s business model is more idiosyncratic.
“There is no systemic problem and therefore should not have any contagion or spillover to European banks. Like their US counterparts, European banks have gradually brought their bond portfolios to market as as rates rose, with no significant impact on common equity tier one (CET1) capital ratios because sensitivity is low. The system remains robust and sound,” Exane said in a note.
“We would buy the eurozone banking sector on weakness, including favorite stocks such as Unicredit, Commerzbank and Caixa,” the analysts added.
“Eyes will remain on the United States for now because banks and regulators will work to stabilize SVB’s specific situation.” (Amanda Cooper, French version Laetitia Volga, edited by Blandine Hénault)
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