Silicon Valley Bank’s (SVB) collapse has had a “limited impact” on the European Union but authorities must still “stay alert” to events as they unfold, European Commissioner Mairead McGuinness has said. Despite McGuinness’ reassuring remarks, stocks of Europe’s largest banks still plunged by as much as 10% on March 15.
Silicon Valley Bank’s ‘Limited’ EU Impact
According to the European Commissioner for financial services, Mairead McGuinness, the collapse of the U.S. bank Silicon Valley Bank has so far had limited impact on the European Union (EU). However, in her March 15 remarks before the EU parliament, McGuinness said the region’s authorities should “stay alert” to the unfolding events in the international markets.
McGuinness also revealed that the European Commission (EC) is currently monitoring the banking situation in the United States and that it hopes to learn important lessons.
“The direct impact on the European Union seems to be limited but we should reflect on whether there are lessons to be learned for the European Union’s banking sector,” the commissioner told the EU parliament.
Credit Suisse Drags Down European Banking Stocks
Prior to McGuinness’ remarks on the impact of SVB’s collapse on the EU, an unnamed spokesperson for the European Commission was quoted in a Reuters report stating the bank had an insignificant presence in the region, hence the limited impact. While the commission expects the EU to emerge from the latest U.S. banking system crisis largely unscathed, McGuinness however warned that rising inflation still remains a key threat.
However, despite McGuinness’ reassuring remarks, stocks of Europe’s largest banks still plunged by as much as 10% on the same day. The stocks were dragged down by Credit Suisse, Switzerland’s second-largest bank, whose shares hit an all-time low after the group’s main shareholder, the Saudi National Bank, said it could no longer bail out the beleaguered entity.
According to a report, the Saudi National Bank’s decision was made after a PwC audit revealed “material weaknesses” in Credit Suisse’s internal controls. As of writing, Credit Suisse shares have seen marked recovery on Thursday, after news of assistance from the Swiss National Bank.
What are your thoughts on this story? Let us know what you think in the comments section below.