The German Federal Financial Supervisory Authority (Bafin) is not very concerned about the bank failures in the U.S. for the German financial market.
“The risks of the rapid rise in interest rates, especially for certain smaller banks, have been on our radar for a long time,” Bafin President Mark Branson told the Frankfurter Allgemeine Zeitung (Wednesday edition). “However, we do not see any direct risk of contagion for the German financial market from the problems in the U.S.”
The German banking system has so far digested the effects of the significant key interest rate increases well, Branson said. He said that higher interest rates are suitable for the banking business.
“Real estate markets are also in our focus,” Branson said. “Especially in commercial real estate, we’re dealing with high financing volumes, so if something goes wrong there, it gets into the banking system.” He said that such developments need to be identified and counteracted as early as possible.
The California-based Silicon Valley Bank (SVB), which specializes in start-up financing, was closed on Friday after a failed emergency capital increase and placed under state control – as was Signature Bank from New York. Silicon Valley Bank had invested a lot of money in the low-interest phase, for example, in U.S. government bonds with long maturities, which lost value with the turnaround in interest rates.
This caused turbulence in the financial markets on Monday. The financial markets have since calmed down given the intervention of the Treasury, the Federal Reserve, and the Deposit Insurance Corporation.