SVB collapse unlikely to strike Belgian banks

The National Bank of Belgium is closely monitoring the situation surrounding the collapse of the American Silicon Valley Bank (SVB). But at the same time, the regulator says that the business model of that bank cannot be compared with that of Belgian banks. The exposure for our country would also be very limited. The exposure is also limited for the entire eurozone, says the Eurogroup.

Silicon Valley Bank went under in recent days, according to National Bank director Tom Dechaene in an interview with the time by “a combination of a slow bank run and losses on investments”.

”That banking model is completely different from what we know here, ” he says, because the Belgian banks have retail customers who regularly receive their wages and thus ensure a continuous flow of income.

At Silicon Valley Bank, the clients were tech companies with varying amounts.

The extent of exposure of Belgian banks and Belgian technology companies to Silicon Valley Bank and Signature Bank – which has since also been closed by the US authorities – has yet to be clarified, but the National Bank assumes that this is very limited. In addition, the US government has decided that all funds at SVB and at Signature Bank will be released, thus allowing tech companies to recover all their money.

Also from Germany and France there were reports on Monday that the fall of the two US banks “does not pose a threat to financial stability, because they are not of systemic importance”. The SVB branch in Frankfurt was closed on Monday by Order of the German regulator Bafin. On the other side of the North Sea, 3,000 British companies have been saved, after the bank HSBC took over the British subsidiary of SVB. Find out in the report.

The exposure of the eurozone to the financial consequences of the bankruptcy of the Silicon Valley Bank is very limited. Eurogroup President Paschal Donohoe told Bloomberg Television on Monday.

”We have a very strong regulatory and resolution framework in Europe, but of course banking developments like these raise questions, and of course we will discuss them today in the Eurogroup, ” Donohoe referred to the longer – planned meeting of eurozone finance ministers later on Monday.

According to Donohoe, once again it turns out that risks and moments of change can occur unexpectedly. “From a European perspective, we are in a good position. Over the past decade, we have made significant changes to our regulatory framework. We can follow up and respond to developments if necessary, ” said The Irishman. He expressed his confidence that”we are able to manage this type of risk”.

According to Donohoe, it will also be examined how to ensure that the tech sector can continue to grow and its prospects are not significantly affected. “I think our banking system in Europe understands the risk in the European and global tech sector very well and has the right measures to manage that risk and address it in the future,” the Eurogroup president concluded.

Silicon Valley Bank, primarily active as a banker to tech companies, went bust last week. This is the largest bank failure since the 2008 financial crisis. The news sent the stock markets significantly lower on Monday. Investors fled en masse to government bonds deemed safe.

The author: Michel THEYS

Michel Theys, a Belgian native, began his career as a civil servant, serving the public for several decades. After retirement, he shifted gears to follow his passion for journalism. With a background in public administration, Theys brought a unique perspective to his reporting. His insightful articles, covering a wide array of topics, swiftly gained recognition. Today, Michel Theys is a respected journalist known for his balanced and thoughtful reporting in the Belgian media landscape.

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