According to Petar Iliev, similar things often happen in the States
The failure of the two American banks – Silicon Valley Bank (SVB) and Signature Bank – will not affect the European banking system. This was assured in the “Hello, Bulgaria” studio by the financial journalist from the “Banker” newspaper Petar Iliev.
“Specific banks are regional to the US. They are not big. When it comes to a small bank, the big ones don’t have problem receivables from it. The serious financial crisis in 2008 happened because two large national banks that financed mortgage loans in the States went bankrupt,” explained Petar Iliev. And he added that the two bankruptcies are under different procedures.
After the collapse of SVB: Bank stocks around the world collapsed
“When a bank has intractable problems, a large part of its assets are performing. That is, they are repaid, there is income on them, but not enough to respond to the liquidity pressure. All its obligations are separated into a bridge bank, which carries out the operations normally. But the owners of the restructured bank in question have lost it forever. This bridge bank is under the control of the Federal Deposit Guarantee Corporation”, explained Iliev. According to him, there are currently speculations that deposits in SVB for a total amount of 25 billion dollars will not be covered.
Germany closes SVB branch
One of the reasons for the bankruptcy is the sharp rise in interest rates due to the fight against inflation, the financial journalist believes.
“This mainly concerns the American SVB, because its profile was to finance startups. This is an extremely risky investment”, explained Iliev. And he concluded that such bankruptcies in the US are normal.
Watch the whole conversation in the video.
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