The collapse of Silicon Valley Bank (SVB), the 16th largest bank in the US, has caused complete market turmoil in the US and Europe.
Despite US financial authorities and even the US President announcing a plan to ensure that depositors could retrieve their funds, smaller US banks, including Western Alliance Bancorp and Zions Bancorporation, suffered massive market share price losses.
‘At least 20 regional US banks experienced serious trouble and their stock prices plunged’
At least 20 regional US banks experienced serious trouble and their stock prices plunged, causing trading halts. The chaos has spread outside the US, even here in SA. Ironically, it kind of helped the Rand recover some of its recent losses verse the Dollar though.
Internationally the Stoxx Europe 600 Banks index showed the top 42 EU and UK banks fell 5.6 per cent, and Japan’s Topix Banks index fell by over 7%. These figures translate into billions and billions of Rands value and are quite scary.
To give you an idea of how bad the knock on effect can be, just consider what happened on the first day of the chaos. The four biggest US banks lost $52 billion in market value in just that first day of panic alone.
No wonder (relatively) smaller banks across the US and internationally are scared and were so relived when the US Government began to step in so quickly.
Unlike back in 2008 when responses were slow, the politicians and bankers all worked after hours and over weekends to try address the crisis and take some action to calm the markets.
