FRANKFURT, March 16 (Reuters) – European company treasurers had been on alert on Thursday, with a German trade affiliation warning towards complacency and main corporations saying they had been intently monitoring developments within the international banking system.
German company treasurers had been urged by an trade affiliation to not “underestimate the present state of affairs”, after Switzerland’s second-biggest financial institution Credit score Suisse sought to shore up its liquidity and restore investor confidence by borrowing as much as $54 billion from the Swiss Nationwide Financial institution.
The weblog submit from the Affiliation of German Treasurers, entitled “SVB collapse not with out penalties for treasurers”, requested whether or not this occasion was a “Lehman 2.0” second.
Policymakers have burdened that the state of affairs following the demise of Silicon Valley Financial institution (SVB) is totally different to the worldwide monetary disaster sparked by the collapse of Lehman Brothers greater than a decade in the past as banks at the moment are higher capitalised and funds, which dried up nearly in a single day in 2008, extra simply accessible.
Allianz, one in all Europe’s greatest monetary companies, stated that authorities had been “properly outfitted” to take care of any liquidity disaster, not like throughout” the worldwide monetary disaster.
However Carsten Linker, head of the German treasurers affiliation’s danger administration division, stated: “The velocity and scope of such disaster developments within the capital market are at all times exceptional.”
“Elevated consideration to potential consequential or amplifying results can also be a should,” Linker was quoted as saying, referring to the interconnectedness of markets that would rapidly set off additional issues in Europe.
Hapag-Lloyd (HLAG.DE), the German container delivery group, stated it was “observing the state of affairs very intently”, with the same remark from German chemical substances maker BASF (BASFn.DE).
“Globalization is fantastic, but it surely additionally opens avenues of contagion. And we merely do not know but the diploma to which the fallout can hit European banks,” stated Utz Greiner, a companion at Vienna-based treasurer consultants Schwabe, Ley & Greiner.
“I’d count on corporates to take precautionary measures,” he stated, suggesting they transfer money deposits into cash markets.
He additionally suggested diversifying banks and organising new undrawn credit score traces, though added each can take months.
Greiner estimated that solely 20-30% of German small-cap corporations had been totally outfitted with greatest company treasury practices for moments of market stress.
The submit from the German treasurers affiliation stated that the nation’s capital and banking markets confronted solely “average” impacts from turbulence within the wake of SVB’s collapse.
“Nonetheless, treasurers shouldn’t underestimate the present state of affairs, even when they themselves will not be straight or not directly affected,” it wrote.
Reporting by Tom Sims, Marta Orosz, and Patricia Weiss; Enhancing by Paul Carrel, Friederike Heine and Alexander Smith
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