Wall Street financiers fear a new banking crisis in the United States after the shares of Silicon Valley Bank (SVB), a lender to tech startups, fell (-60%). Against this background, a number of US banks have also faced declines in their own securities, and an urgent collection of economic aid to the affected SVB has sparked growing panic among stock traders. informs Bloomberg agency.
In addition to SVB, Silvergate Capital Corp also faced financial problems. The value of its shares fell significantly against the background of the exit of depositors and large withdrawals of funds. However, the article states that a similar fate may befall some other small and medium-sized players in the US loan market in the future.
“One bank is going bankrupt, another is floundering, and Wall Street is asking if it’s a crisis. The problem for once-strong California lenders was an unusually volatile deposit base that quickly drew cash. But underneath there is a crack in the financing: rising interest rates have left banks liable for low-interest-rate bonds that cannot be sold hastily without loss.
In this case, the risks increase for most US banks. If too many customers open their deposits at the same time, it can lead to a vicious circle. Christopher Whalen, head of financial advisory firm Whalen Global Advisors, said this scenario could deal a “terrible blow” to the entire US banking industry.
“Silicon Valley Bank (socialbites.ca) is just the tip of the iceberg. I’m not worried about the big guys, but most of the little guys will take a terrible blow. Many will urgently need to raise capital,” he warned.
March 10 Financial Times knowledgeableThat the four largest banks in the United States lost more than $52 billion in market value in one day due to the financial difficulties faced by the American Silicon Valley Bank (SVB). The organization was engaged in lending to tech startups, but the outflow of investors caused a sharp drop in the value of its shares. As a result, JPMorgan Chase, Bank of America, Citigroup and Wells Fargo were forced to sell their own securities.