Collapsed Silicon Valley Bank had ‘many’ Irish customers, says McGrath

Silicon Valley Bank had many business customers in Ireland, Minister for Finance Michael McGrath has told reporters, saying a team of top officials are to assess whether the collapse of the top tech sector lender will have an impact on the broader Irish economy.

US authorities intervened to shore up confidence in the financial system, and HSBC bought the bank’s British arm in a £1 rescue deal on Monday, as European leaders sought to reassure markets that regulatory reforms since the last global economic crisis would limit the risk of uncertainty spreading.

Mr McGrath said the HSBC rescue was positive news for Ireland as local customers may have been using its British arm.

“There are certainly many business customers in Ireland of Silicon Valley Bank,” he continued.

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“I do think the acquisition of the UK arm of the bank is also a benefit to us, given the likelihood that some Irish customers may well have been doing their business through that arm of the bank itself.”

The Financial Stability Group – a team of top officials from the Department of Finance, the Central Bank of Ireland and the National Treasury Management Agency – are to “do an assessment of any impact that there may be”, he added.

[ European banks slide amid Silicon Valley Bank fallout ]

The collapse of the bank, after panic spread among its tech sector client base and triggered a run on deposits, was discussed among euro zone finance ministers as they met in Brussels on Monday for talks on the digital euro and fiscal policy.

Eurogroup president and Minister for Public Expenditure Paschal Donohoe stressed that Silicon Valley Bank had “particular circumstances” and that the situation for banks in Europe was very different.

“It is in recognition of how quickly information can spread that we also have a very clear message here this evening regarding where our banking system stands at the moment,” Mr Donohoe told reporters.

The European banking system is “regulated in a different way” and “has a higher level of liquidity”, he continued.

“Our information is very clear, there is now not a direct link between our own banking system and that of Silicon Valley Bank.”

Concerns about the bank’s stability were triggered by its sale of US treasury bonds, which had lost value because of rising interest rates, forcing it to take a loss and try to raise new capital.

The turmoil in global bank stocks since the collapse has underscored the impact of rising interest rates ahead of a key meeting of the European Central Bank on Thursday, at which it had been expected to deliver another large 50 basis point hike in a bid to curb inflation.