With still fresh memories of the collapse of Lehman Brothers, the global financial crisis of 2008-2009 and its transformation into the eurozone debt crisis, Europeans could not help but worry. The crisis of regional and relatively small US banks, such as Silicon Valley Bank which went bankrupt 10 days ago, as it turned out, was instantly transferred to banking giants Europe, when the share of Swiss Credit Suisse collapsed within a week, pulling the banking sector, and with it the European stock markets.

The risks didn’t last long: Larry Fink, CEO of BlackRock, described SVB’s bankruptcy as “the initial push of a slow-burning crisis in the US financial system” and economist Nouriel Roubini told Bloomberg that “if Credit Suisse collapses, Europe’s Lehman Brothers will.” Undoubtedly, investor fear reflexes could trigger further shocks as the crisis of confidence in the broader financial system drags on. This was proved, after all, by the great upheaval in the European stock markets, when it became known about a loan of almost 54 billion dollars, which the Bank of Switzerland would provide to Credit Suisse. Even while a bailout for First Republic, also a regional US bank, was already in the works following a bold $30 billion capital injection by US banking giants.

The two crises are not related to each other, but are due to different causes, and their timing, even if it cannot be called completely random, is largely psychological in nature. The only common denominator is the high interest rate, which is less of a cause than an aggravating factor for both US regional banks and Switzerland’s second largest bank. The increase in interest rates of the ECB, the US Federal Reserve and the Bank of England caused a drop in the value of bonds, a large amount of which is in the portfolios of banks. This inevitably puts a strain on banks, exacerbating any other problems they face.

Rising borrowing costs burdened already weak banks and led to their collapse.

However, the bankruptcy of Silicon Valley Bank (SVB) was the result of his precarious position and the problems of technology companies, which were his main clientele. As for Credit Suisse, it is known that it has been in a tailspin for more than a year, mainly due to its own sins. It suffers from scandals, mismanagement and bad decisions, such as investing in toxic investments, including the much-touted Archegos fund, whose collapse resulted in a loss of $5.5 billion two years ago. As a result, he was surrounded by negative publicity and left most of his clientele, losing dizzying amounts of capital. At the end of last year, capital outflow was estimated at nearly $120 billion. And while it is in the process of restructuring, this week it revealed some “significant shortcomings” in its annual balance sheet and rekindled concerns about the banking industry just as it was about to fizzle out.

Investors fled in a frenzy during the week when Credit Suisse’s biggest investor, the National Bank of Saudi Arabia, announced it did not intend to provide additional capital to the Swiss bank. Almost no one was interested in the Saudi bank’s explanation that providing additional capital would increase its stake in Credit to 10%, meaning it would run into regulatory problems. In addition, Amara al-Qudairi, president of the National Bank of Saudi Arabia, added that he sees no reason to provide additional capital to Credit Suisse, as he considers the restructuring plan satisfactory. Some analysts say the Swiss bank “gouged its own eyes out” when it spoke of “significant weaknesses in its balance sheets” at a time when investor reflexes were fueled by the failures of Silicon Valley Bank and Silvergate.

At the same time, the ECB and its President Christine Lagarde show that they do not consider the situation so dangerous, and have begun a new increase in the euro interest rate by 50 basis points, considering that inflation clearly poses a greater threat to the economy. It is revealing that ECB President Christine Lagarde said that the eurozone’s financial system is clearly stronger today than it was in 2008. From a regulatory point of view, it is probably better protected than the American one. This is due to the fact that after the global financial crisis of 2008, authorities on both sides of the Atlantic introduced strict rules. But if they remain in the eurozone, then in the US they are already partially weakened.