February 21. 2024. 6:18

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Germany shuts down local Silicon Valley Bank branch

Germany’s financial regulator BaFin has closed down the country’s branch of the Silicon Valley Bank, which faces bankruptcy in the US, to protect creditors amid worries of a new financial crisis.

Silicon Valley Bank hit international news lately as the recent collapse of the California-based company was reported to be the biggest bank collapse since the 2008 financial crisis.

BaFin responded to the collapse, announcing on Monday that it prohibited asset disposals and payments for the bank, temporarily banning it from making business with customers, citing “the existing threat to the fulfilment of obligations to creditors.”

The situation posed no “threat to financial stability” and the German branch has “no systemic relevance”, the body added.

The government does not deem current developments to be similar to those ahead of the 2008 financial crisis, its chief spokesperson Steffen Hebestreit told reporters.

“I do not believe that we are in a comparable situation to the one we were in at the time,” he said.

Investors, however, were less convinced: Despite BaFin’s assurances, the German national stock market index DAX lost 3% on Monday after already falling during the weekend.

The trend was interpreted by analysts as reflecting worries that the banks’ collapse could be the start of a new financial crisis.

“Investors’ concern is that more banks may throw in the towel in the face of rising interest rates and yields,” analyst Christian Henke told public broadcaster ARD.

(Julia Dahm | EURACTIV.de)