BERLIN, March 14 (Reuters) – European banks aren’t fully within the clear after the collapse of Silicon Valley Financial institution (SIVBV.UL) and Signature Financial institution (SBNY.O) regardless that they don’t face a systemic threat, the president of German financial analysis group DIW stated on Tuesday.
Whereas there are various causes to be much less cautious, “I would not give the all-clear (in Europe), as a result of the foundation explanation for the woes of those two U.S. banks is the very speedy improve in rates of interest, and that caught many individuals off-guard”, Marcel Fratzscher stated.
Leverage in the USA is way larger than in Europe, stated Fratzscher in regard to SVB’s excessive imbalance between short-term liabilities and long-term investments, which had misplaced worth with the rise in rates of interest.
However he stated many European banks had been additionally going through this problem.
“We now have to be very cautious,” Fratzscher stated, including that German banks have not absolutely recovered from the 2008 monetary disaster initiated by the autumn of Lehman Brothers, which had “systemic which means” and prompted a domino impact.
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“We do not see that within the case of SVB, which is comparatively small,” he stated.
Reporting by Maria Martinez;
Enhancing by Miranda Murray and Alison Williams
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