Europe bids to reassure markets SVB panic won’t spread

BRUSSELS – European ministers raced to calm markets Monday over the collapse of Silicon Valley Bank in the United States, insisting it does not seriously threaten the continent’s financial sector.

French Finance Minister Bruno Le Maire went the furthest, telling investors to “calm down”.

SVB, a key lender to start-ups across the United States since the 1980s, collapsed after a sudden run on deposits, prompting regulators to seize control on Friday.

By Sunday night, US federal authorities stepped in to ensure depositors still had access to their funds at SVB and regulators took over a second troubled lender, Signature Bank.

Most financial market observers do not fear a meltdown in the markets comparable to the 2008 financial crisis, but economists warned of a growing risk of recession.

On Monday, senior EU figures sought to reassure investors that the European financial system could withstand such shocks, after the collapse was felt across Europe’s banks.

“The possibility of indirect impact is something that we have to monitor, but at the moment, we don’t see it as a significant risk,” the EU’s economy commissioner Paolo Gentiloni told reporters in Brussels, ahead of a meeting of eurozone finance ministers.

He said an impact of SVB’s demise on global markets was “predictable,” but added, “this is one thing; assessing the fact that there is a real risk of contagion is a different thing”.

Gentiloni said, however, that the EU was “monitoring the situation in close contact” with the European Central Bank.

The EU’s largest economies, France and Germany, said on Monday there were no risks to their financial systems from the collapse.

Several major European banks including Societe Generale, BNP Paribas, Unicredit and Santander saw their share prices fall steeply by more than five percent just after 1500 GMT.

A spokeswoman for France’s central bank, however, said French banks are not exposed to SVB.

France’s Le Maire also told investors to “calm down, and just have a look at the reality. The reality is that the French banking system is not exposed to the SVB”.