By Christoph Steitz
FRANKFURT, March 28 (Reuters) - German engineering
firms, part of the country's industrial core, are closely
monitoring shocks in the global banking sector but see
themselves as well-prepared even if the situation deteriorates.
"Since the financial crisis in 2009, the German mechanical
engineering sector has constantly increased its equity ratio,
raised efficiencies and invested in production equipment and
innovation," Bianca Illner of the VDMA engineering association
said.
The VDMA represents around 3,500 companies in the machine
building industry and counts Thyssenkrupp , Siemens
Energy and Heidelberger Druckmaschinen among its
members.
The comments come after the collapse of Silicon Valley Bank
this month triggered a major sell-off in global banking stocks
and eroded investor confidence, in the worst banking shock since
the financial crisis 15 years ago.
Fears of contagion have also spread to Europe, where
Switzerland's Credit Suisse had to be rescued by peer
UBS and shares in Deutsche Bank have
plunged.
"Generally, mechanical engineering as an industrial sector
is highly dependent on a functioning financial sector, as it
relies on investments and working capital loans to finance its
production processes and innovations," Illner, who heads VDMA's
Business Advisory, told Reuters in emailed comments.
"Therefore, we are watching the distortions in the financial
sector very closely."
Whether an individual company was sufficiently funded to
survive a financial crisis depended on several factors,
including available cash, type and size of loans as well as how
diversified businesses are, Illner said.
"However, we see the overall engineering sector as fairly
robust, even if the banking crisis continues to worsen."
(Reporting by Christoph Steitz
Editing by Miranda Murray and Mark Potter)
