The black day of the banks on Wall Street spreads this Friday to the European entities. The 60% collapse of Silicon Valley Bank (SVB), after announcing a capital increase and an accelerated sale of assets, has filled investors with uncertainty. SVB is one of the main banking partners of the US technology sector, which will have to increase capital after losing 1,800 million dollars -1,700 million euros- by selling a package of more than 20,000 million in bonds -about 19,000 million euros- to satisfy the demand for cash withdrawal from its depositors, who already doubt its viability.
The escalation of interest rates and the forecast that they will continue to rise especially punishes startups, whose business falls and creates a hole in the entities most exposed to the sector such as SVB itself, which has lost more than half of its value in a day. This week the liquidation of Silvergate, linked to the crypto world and which has some 6,000 million in deposits, was also announced.
The tightening in the startup world leaves as a worst case scenario for any bank to be left with so little cash from deposit flight or have so many losses that its capital is eroded, ultimately leading regulators to sell the bank to yet another rival. strong or liquidate it. The bank index of the S
SVB has alerted the markets, which fear that its difficulties are the tip of the iceberg of widespread problems in the sector, with financing tensions for companies. Bank of America, Wells Fargo or Citi fell more than 4%. "People have realized that the problems SVB is experiencing could affect the entire banking industry," Steve Sosnick of Interactive Brokers explained in an analysis. "Everyone is looking for what the next problem will be," said Art Hogan of B Riley Wealth Management.
In addition, with higher rates the economy cools down, fully affecting economic activity, employment and banks, which have fewer clients to lend money to. The stock markets also pay to go with the foot somewhat changed, because in recent weeks they had discounted that the path of interest rate rises was slowing down, but the latest interventions by the president of the Federal Reserve, Jerome Powell, point to the opposite side.
The contagion effect has not been long in coming and in Europe, where the ECB also plans to adjust rates upwards in a few days, the falls are widespread among banks. In the case of the Ibex 35, the large entities led the declines after the opening. Santander, Bankinter, Sabadell and BBVA left between 5% and 3%. The Ibex 35, dragged by the bank, gave up close to 2% at the start of the day.
At the continental level, the 4.2% drop in the Stoxx banking index stood out. Deutsche Bank is left up to 10%, HSBC more than 5%, Societé Générale the same, BNP Paribas 4.4%...
In Asia the luck has not been different. Hong Kong has left 3% and Tokyo 1.7%.
This afternoon the markets will be watching the employment data in the US and the evolution of wages, which will serve as a thermometer to know how the economy is and give clues about the path of Federal Reserve rates.
