by Philip Blenkinsop
BRUSSELS (Reuters) – EU finance ministers and the EU’s economy commissioner have downplayed the risk of contagion following the collapse of U.S. bank Silicon Valley Bank (SVB), as European bank stocks see their most significant setback since the start of Russia’s invasion of Ukraine.
The European banks’ STOXX compartment was down 5.65% at the close of trading on Monday. Since Thursday evening, it has lost 9.4% and reached its lowest level since the beginning of January.
The French Minister of Economy and Finance, Bruno Le Maire, called on the markets to “calm down”, as the meeting of Eurogroup finance ministers opened in Brussels, and the European Commissioner for Economy Paolo Gentiloni underlined that he did not see any risk of contagion on European banks.
“There is a possibility of indirect contagion, but at the moment we do not see this as a specific risk,” said Paolo Gentiloni.
German bank Commerzbank was the worst hit in the index, falling 12.7%, but German Finance Minister Christian Lindner told Brussels that the collapse of the SVB “didn’t change anything” for Germany.
“I have confidence in the German economy,” he said.
Bruno Le Maire and his Belgian counterpart Vincent Van Peteghem also wanted to reassure their respective banking sectors as investors continued to get rid of their securities.
In France, Societe Generale and BNP Paribas fell by more than 6%. The Belgian bank KBC lost 5.7% at the close.
According to Bruno Le Maire, there is no link between the different situations. The economic and financial model of BNP Paribas, Société Générale and other French banks is radically different from the model of the Silicon Valley Bank, said the minister.
The Belgian Minister of Finance also made a point of clearly differentiating between American and Belgian banks, the latter benefiting from a “very clear” European and Belgian regulatory framework.
On the Spanish side, Sabadell, Santander, BBVA, Caixabank and Unicaja lost 7 to 11%.
“Spanish banks have a strengthened supervisory framework and a healthy balance sheet,” also reassured Nadia Calvino, Spanish Minister of the Economy.
On a more nuanced note, Irish Finance Minister Michael McGrath said it was still too “early” to assess the impact of the collapse, adding that Ireland welcomed HSBC’s acquisition of the subsidiary of Silicon Valley Bank in the UK after the bankruptcy of the American parent company, for one pound sterling.
(Report Philip Blenkinsop, written by Geert De Clercq and Charlotte Van Campenhout; French version Kate Entringer, edited by Tangi Salaün)
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