Taoiseach ‘not concerned’ about Irish banks as Credit Suisse latest to rattle markets – The Irish Times
Taoiseach Leo Varadkar has struggled to reassure the public about the stability of Irish banks as lenders’ shares around the world slumped again on Wednesday as concerns over ailing Swiss lender Credit Suisse rose following the collapse of Silicon Valley Bank in the United States has increased over the past week.
The Iseq Financial Index, dominated by the three remaining Irish banks, fell 6.1 percent, bringing losses to 16 percent over the past six days. The broader European banking sector ended down 6.9 percent as banks also led Wall Street stocks lower.
Speaking to reporters in Washington, Mr Varadkar said Irish authorities were “monitoring international developments very closely”.
“But we’re not worried about the stability or health of our banks,” he added.
[ European banking stocks slide on Credit Suisse worries ]
[ Credit Suisse isn’t the next Lehman Brothers. Yet ]
Credit Suisse, which is in the midst of a major restructuring plan after a spate of scandals in recent years, plunged as much as 31 percent to a record low as did the Saudi National Bank, which anchored a capital increase late last year by the Swiss group, its largest shareholder ruled out an increase in his stake from the current level of just under 10 percent.
Swiss financial authorities issued a statement in support of Credit Suisse on Wednesday night, saying it continues to meet stringent capital and liquidity requirements for systemically important banks and that the country’s central bank would provide it with liquidity if needed. She added that the recent troubles at US banks “do not pose a direct risk of contagion to Swiss financial markets”.
Three U.S. lenders, Silicon Valley Bank, a major backer of tech startups, and crypto-focused Signature Bank and Silvergate Bank, have collapsed in the past eight days. For now, a key concern for the broader European banking sector is how the crisis will affect central bank plans to raise interest rates further.
Irish banks are among the biggest beneficiaries of rising European Central Bank (ECB) interest rates, analysts say, as they rely more on interest income than the average eurozone bank.
[ Martin Wolf: Banks are designed to fail – and they do ]
Cantor Fitzgerald Ireland analyst James Buckley said the impact of the US banking crisis “appears to be limited for Irish banks, it has reminded investors of the risks inherent in the sector, particularly if the global economy enters a recession”. .
Financial markets are now expecting ECB President Christine Lagarde to heed the banking turmoil and refrain from delivering a promised half-point rate hike on Thursday. Money markets are pricing in a smaller 0.25 point hike.
Meanwhile, Larry Fink, the chief executive officer of Blackrock, the world’s largest wealth manager, warned clients on Wednesday that the Silicon Valley bank collapse could be just the beginning of a “slow crisis” in the US financial system with “more seizures and shutdowns coming.”