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Monday, March 20, 2023

the risk of contagion is reduced

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Paris – The turbulence in the US banking sector after the bankruptcy of Silicon Valley Bank (SVB) should have a limited impact on European banks, which are organized differently, indicated a note published yesterday by the financial rating agency Moody’s.

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“The balance sheet structure of European banks limits contagion,” Moody’s said, also downgrading the outlook for the US banking sector from stable to negative.

To justify its position, the agency cites a higher proportion of deposits at the European Central Bank by the bloc’s entities.

On the other hand, debt securities only represent 12% of the balance sheets of banks in the Eurozone compared to 30% of those in the United States.

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“Deposits are probably more stable in Europe as they have grown less rapidly,” Moody’s also notes.

Since the beginning of this week, the European authorities have made several reassuring statements.

“There is no direct contagion and the possibility of an indirect impact is something that we have to monitor, but at the moment we do not see a significant risk,” said the European Union (EU) Commissioner for the Economy, Paolo Gentiloni, before a meeting of eurozone finance ministers.

Source: Ambito

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