Banking Crisis
This week was littered with news about a looming banking crisis. It began with the spectacular downfall of SVB – Silicon Valley Bank
SVB had a debt to equity ratio of 185:1, which means that the there is more usage of creditor financing i.e. bank loans than shareholders’ financing.
SVB had exclusivity clauses with specific clients, which limited their ability to benefit from banking services provided by other institutions. These clients were unable to diversify where they kept their money.
Most of their clients are heavily concentrated in tech startups.
SVB was shut down on March 10th, 2023 by US regulators, because of a sudden increase in deposit withdrawals and a failed attempt to raise equity to cover this outflow.
SVB collapse was driven by the ‘first Twitter-fueled bank run’
Conspicuous information came out of the banking industry when it was reported that several SVB and First Republic executives had sold large quantities of their stock before they folded.
SVB execs sold millions of their company stock in lead up to collapse, federal disclosures show
First Republic Bank execs quietly sold $12M in stock BEFORE SVB crash
The SVB Board had various characters on it, many not qualified for their jobs.
Only ONE member of failed SVB’s board had a career in investment banking
And in California…
Gavin Newsom Kept SVB Ties Secret While Lobbying For Bailout
Silvergate Bank closed its doors on March 8th, 2023.
Major crypto lender Silvergate Bank announces ‘wind down’ to liquidate assets
Signature Bank fell on March 12th, 2023.
First Republic bank, based in san Francisco, has been bailed out by a group of banks including JP Morgan and the Federal Reserve.
First Republic was rescued by rivals. Silicon Valley Bank was abandoned by its friends
Switzerland’s Credit Suisse was dropped by it’s biggest Saudi investor and purchased by UBS.
Saudi National Bank will not increase stake in Credit Suisse after shares drop
Biden is caught telling the truth…
https://twitter.com/ronin19217435/status/1636007093906952192?s=12&t=P3LeMncIL7x1cPGyNOx3ww
Bank of America has $113 billion of unrealized losses…
Bank of America has $113 Billion of unrealized losses on its balance sheet
— Jack Farley (@JackFarley96) March 15, 2023
This represents >60% of tangible book value pic.twitter.com/rt6NgV4bBL
The Central Bank Game Plan
And lastly…
‘The results are in and the first group of Central Banking Awards 2023 winners has been unveiled, with the National Bank of Ukraine taking the prize as Central bank of the year.’
Central Banking Awards 2023: first group of winners revealed
