EU: "No Significant Risk in US SVB Incident"

Only Entered 3 Countries... Scale Itself Is Not Large

The European Union (EU) stated that there is currently no significant risk posed by the collapse of the U.S. Silicon Valley Bank (SVB) to the European financial market.

On the 13th (local time), according to AP News and others, Paolo Gentiloni, EU Commissioner for Economy, said during a press conference in Brussels, Belgium, "While the possibility of indirect effects (due to the collapse) should be monitored, we currently do not consider there to be any significant risk."

He emphasized that the impact of the SVB collapse should be assessed separately for global and European markets, stating, "We believe there is currently no risk of a chain reaction effect in Europe."

He also added that they are closely monitoring the situation in close contact with the European Central Bank (ECB). On the same day, Daniel Perry, spokesperson for the European Commission, responded to related inquiries at a regular briefing by saying, "SVB's presence within the EU is very limited."

This is interpreted to mean that the scale of SVB's entry into the EU financial market is not large, so the direct impact is also limited. Before its collapse, SVB had operations in only three of the 27 EU countries?Germany, Sweden, and Denmark?and its overall scale was relatively small.

Among the three countries, Germany had the largest scale of SVB operations. As of the end of last year, the total balance sheet of SVB's German branch was 789.2 million euros (approximately 1.1 trillion Korean won).

In this regard, the German Federal Financial Supervisory Authority (BAFIN) announced the closure of SVB's Frankfurt branch. The authority explained that the branch only provided loans and was not connected to the financial system, so it does not pose a threat to financial stability.

[Image source=Yonhap News]

Following Germany, French authorities, representing the EU's second-largest economy, also drew a line by stating that there would be no repercussions as SVB had not entered their country.

Bruno Le Maire, French Minister of Economy and Finance, said in an interview with France Info radio that French banks have a solid financial system capable of withstanding shocks.

Previously, SVB, which had served as a financial lifeline for U.S. startups, faced a liquidity crisis last week following a capital increase announcement, a sharp drop in stock price, and a massive withdrawal of deposits (bank run), ultimately leading to its bankruptcy on the 10th.

Experts believe that the SVB collapse is unlikely to have an immediate direct economic impact on Europe. However, concerns have been raised that the incident may spread investor anxiety throughout the financial markets and that other banks could face similar potential risks.