“Calm down!” EU finance ministers play down SVB contagion despite banking shares rout

BRUSSELS, March 13 (Reuters) – European finance ministers and the EU’s economics commissioner played down the contagion risk of the collapse of U.S. Silicon Valley Lender (SVB) while European bank shares observed their largest rout given that the begin of Russia’s invasion of Ukraine.

Pan-European STOXX banking index (.SX7P) was down 5.38% by 1700 CET immediately after staying down more than 6%, extending Friday’s losses when it drop 3.8%. More than two days, it shed almost 9 %, soon after currently being down as much as 10.4% in afternoon trade and hitting its lowest level given that early January.

At the commence of a Eurogroup finance ministers assembly in Brussels, French Finance Minister Bruno Le Maire known as on markets to “tranquil down” and European Economic Commissioner Paolo Gentiloni stressed he did not see a danger of contagion for European banking institutions following SVB’s collapse (SIVB.O).

“There is a risk of indirect contagion, but at the minute we do not see this as a certain risk,” Gentiloni mentioned.

Germany’s Commerzbank (CBKG.DE) was the worst-hit financial institution in the index, down approximately 13% at 1700 CET, but German Finance Minister Christian Lindner stated in Brussels that the SVB collapse “adjustments absolutely nothing” for Germany.

“I have faith in the German financial system,” he mentioned.

France’s Le Maire and his Belgian counterpart Vincent Van Peteghem also reported they saw no certain issue for their country’s banking companies, as traders were being dumping their monetary institutions’ shares.

Shares of French banking institutions Societe Generale (SOGN.PA) and BNP Paribas (BNPP.PA) were being down above six p.c, when shares of Belgian KBC (KBC.BR) have been down just about 6 p.c soon in advance of market shut.

“There is no backlink between the diverse situations…when you are hunting at the economic design and the fiscal model of BNP Paribas (BNPP.PA), Société Générale (SOGN.PA), and other French financial institutions: it is radically various from the model of the Silicon Valley Bank,” Le Maire reported.

Belgian finance minister Vincent Van Peteghem also poured oil on the waters.

“We have a extremely distinct European and Belgium regulatory framework which will allow us to know what the circumstance is and that of study course assists us to keep to continue to keep have faith in in the banking technique,” he mentioned.

In Spain, shares of Sabadell (SABE.MC), Santander (SAN.MC), BBVA (BBVA.MC), Caixabank (CABK.MC) and Unicaja (UNI.MC) fell involving 7% and 11% in afternoon buying and selling.

“Spanish banking institutions have a reinforced supervisory framework and have a healthy equilibrium sheet,” Spanish financial system minister Nadia Calvino said.

In the meantime, Irish finance minister Michael McGrath reported it was even now “early times” with respects to looking at the affect of the collapse, incorporating Eire welcomes the acquisition of the British arm of the collapsed Silicon Valley Financial institution by HSBC.

Reporting by Philip Blenkinsop creating by Geert De Clercq and Charlotte Van Campenhout Enhancing by Tomasz Janowski and Angus MacSwan

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