Bank stocks around the world tumbled on the first day of the week, despite assurances from the US president that the US financial system was safe.
This comes after US authorities had to step in to protect customer deposits due to the collapse of Silicon Valley Bank. Joe Biden has promised to do whatever it takes to protect the banking system.
Europe and SVB: The continent has limited exposures to the bank
However, investors fear that other lenders could be hit by the fallout, and that has sent global share prices plummeting.
Earlier on Monday, share prices in Spain’s Santander and Germany’s Commerzbank fell by more than 10%.
Germany closes SVB branch
A number of smaller US banks suffered even bigger losses than European ones, despite assurances to clients that they had enough liquidity to protect themselves from shocks.
The German finance minister assured that there was no cause for concern.
“We see that the American government and financial institutions acted decisively. We have our own bodies in Europe, in Germany, for example, our own financial supervisory bodies, which constantly monitor the situation. These institutions leave no doubt in terms of stability. I believe in the German economy.” , said Christian Lindner.
HSBC buys SVB in London for £1
“The only way to stop the panic when it starts is for the government to say, ‘we’re here and we’re not going to ask many questions, if any. We’re going to provide liquidity to the banking system and the financial markets.’ , that the markets are still agitated. The calculations that different market participants make in different segments of the financial markets seem quite complex and it is difficult to predict exactly how events will unfold,” commented Suale Omarova, a professor at Cornell University and a financial analyst .
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