This is the dreaded disaster scenario that shook the financial world. Silicon Valley Bank (SVB), the 16th largest American bank and favored by nearly half of tech companies, was the victim of a “Bank run” on March 9 and 10, a massive bank panic. In 24 hours, some 42 billion dollars of withdrawal orders – a record – were issued by its alarmed customers, the bank having declared that it was seeking to bail out after the deterioration of its bond portfolio.
Can such an episode occur in France? It is unlikely because, as the president of the French Banking Federation, Philippe Brassac, repeated on Saturday March 18 on France Inter, “virtually all French banks are subject to specific rules of caution”. The Basel III agreement provides for a high level of capital and compliance with liquidity ratios. French establishments also regularly undergo “stress tests”, resistance tests organized by central banks.
Limited withdrawals for up to two days
The scenario of a panic movement is all the more hypothetical since, when a systemically important bank is in difficulty, the supervisors do not hesitate to come to the rescue. As was the case with Credit Suisse, tossed about in the markets, which was able to borrow 50 billion Swiss francs (as much in euros) from the Swiss national bank, before being bought by UBS.
And if, despite everything, a “bank run” materializes, threatening one or more banking establishments? The European directives BRRD 1 and 2, adopted in 2014 and 2019, provide that withdrawals can be limited but only for two days and only for the banks concerned, while they are bailed out. On the life insurance side, the Sapin 2 law passed in 2016 authorizes the High Council for Financial Stability to suspend movements on contracts for a renewable period of 3 months.
To prevent savers from rushing to distributors, bank deposits are also guaranteed by the Deposit Guarantee and Resolution Fund up to a maximum of 100,000 euros per person and per banking establishment. The booklet A, the sustainable and solidarity development booklet (LDDS) and the popular savings booklet (LEP) are guaranteed by the State.