MADRID, 20 Mar. (EUROPA PRESS) -
The recent demise of Silicon Valley Bank (SVB) and the subsequent Credit Suisse crisis portend a tighter credit cycle, as policymakers face the task of balancing the fight against inflation with the economic slowdown and growing financial risks.
According to a Crédito y Caución report, the two main financial episodes in recent weeks have led to greater sales of bank securities outside the United States, mainly in euro zone countries.
In this sense, the firm points out that although the balance sheets of the financial sector in the United States and the euro zone are more capitalized than in 2008, policy makers face the "difficult task of balancing the fight against inflation with the economic slowdown and growing financial risks". "The inevitable effect of monetary tightening is more expensive credit for families and companies," the analysis adds.
However, given the current economic strength of the United States, the firm considers it "unlikely" that the Federal Reserve (Fed) will reverse its monetary policy and forecasts an increase of 25 basis points. The European Central Bank already went ahead with a rise of 50 basis points last Thursday.
Regarding the disappearance of SVB, Crédito y Caución believes that this will cause the restriction of the credit lines of many medium-sized companies and will possibly mark the end of the venture capital model that has promoted the development of the sector in the US region over the past decade.
And it is that the disappearance of the bank has meant the biggest bank failure since the financial crisis of 2008. However, and despite having the SVB the cash of almost half of the US start-ups backed by venture capital, the analysis predicts with this episode some "limited" effects on the economy.
"We hope that the concern will dissipate as confidence is restored due to the liquidity support measures of the Administration," says the economist Atradius Dana Bodnar, who sees "implicit guarantees" and "evidence" that the contagion is not affecting systemically important banks.
What is expected, according to the Crédito y Caución analyst, is a greater restriction in the granting of credit, which was already conditioned by high interest rates.
In this context, says the report, companies will be forced to choose between passing the new financial costs on to their final prices or assuming them at the cost of reducing their margins, which would reduce their profitability and impact their credit risk.
