Panic Mustn’t Be Allowed to Spread After SVB Collapse: EU Lawmaker
Germany’s Markus Ferber said there needs to be a review of interest rate and sovereign bond exposures.
Regulators should seek to stop panic spreading after the collapse of Silicon Valley Bank, an influential European Union lawmaker has said.
Markus Ferber, a German who represents the leading center-right party in the European Parliament, said EU bank supervisors should check if European lenders could be vulnerable to interest rate shocks similar to those that felled the California bank on Friday.
“The name of the game is containment now,” Ferber said in an emailed statement. “Panic is infectious and must not be allowed to spread.”
Ferber also called for a rethink of how sovereign bonds are treated under bank-capital rules, a regular theme from German politicians who argue current rules understate the risk of indebted governments such as Italy and Greece.
EU policy makers have sought to play down fears of contagion. A European Commission spokesperson on Monday said SVB had only a "very limited presence" within the bloc, and French Finance Minister Bruno Le Maire told reporters banks in the country were "not exposed" and had different business models to SVB's.
Market jitters have nonetheless spread to the region. The Stoxx 600 Europe Bank Index, which includes lenders based outside the euro zone, fell 6.3%, the largest one-day slide in over a year, according to Reuters.
The U.S. Federal Deposit Insurance Corporation on Monday announced a transfer of SVB’s assets to a new bridge entity to stem financial stability risks, and the bank’s U.K. subsidiary was bought by HSBC for 1 British pound ($1.21).
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