SVB

Answering questions about the bank run on Silicon Valley Bank, the European Central Bank on Sunday underlined its concerns over how European banks are managing risks relating to increasing interest rates. The ECB reiterated that a recent supervisory review found weaknesses at banks, including ignoring consumer behaviour shifts that could lead to deposit withdrawals when rates rise. “Beyond a certain point, it could become an issue,” ECB chief bank supervisor Andrea Enria said in a Latvian interview last week.

Has the sudden collapse of Silicon Valley Bank ignited fears of a new financial crisis? Or is its demise incidental, offering investors an excuse to take profits on attractive gains that bank sector stocks booked in recent months?

As European financial markets closed on Friday, worried investment professionals were hard to find. The sentiment and rising interest rates however are clearly recognised as risk factors.