Tomkiewicz of Kozminski Academy: Poland not in danger of 'bank run' that plunged SVB
Banks in Poland have sufficient levels of equity and a solid deposit base, so fears of a loss of bank liquidity are unlikely to be justified, and it was the so-called "bank run" (the mass withdrawal of deposits out of concern for the bank's liquidity) that led to the collapse of SVB, according to Jacek Tomkiewicz, PhD, of the Department of Economics at Kozminski University.
According to the expert, it is to be hoped that no more U.S. bank failures will follow.
"Let's hope not, although the reasons for SVB's collapse (the discounting of its bond holdings, whose price fell as a result of rising interest rates, and its heavy involvement in financing technology ventures) are to some extent features of most of the US banking sector. After the experience of the 2008 crisis, banks have much higher levels of equity, so they also have a greater ability to absorb potential losses," said Tomkiewicz.
In his opinion, the collapse of Silicon Valley Bank will affect Poland primarily through a change in the situation on financial markets.
"I have not heard of any direct links between European and Polish banks and SVB. The impact will be through changes in the mood of the markets - declines in stock markets overseas are also causing investors around the world to sell rather than buy stocks and bonds. Beyond the impact related to market sentiment, however, there should be no serious cause for concern. Our banks have sufficient levels of equity capital, a solid deposit base, so fears of a loss of bank liquidity are unlikely to be justified, and it was the so-called "run on the bank" (the mass withdrawal of deposits out of concern for bank liquidity) that led to SVB's bankruptcy," Tomkiewicz stated.
The announcement on Friday of the bankruptcy of Silicon Valley Bank (SVB), the most serious such case since the 2008 crisis, and the need to place the bank's deposits under the supervision of the Federal Deposit Insurance Corporation, a government agency, has fueled fears of increased systemic risk to the US financial sector.
On the WSE on Monday, the WIG20 fell 2.57%, while the WIG-banks fell 3.11%.
Source: Kozminski Academy and ISBnews