The recent collapse of two major institutions, Silicon Valley Bank and Signature Bank, has dealt a significant blow to the US banking sector. This marks the second and third largest bank failures since the 2008 financial crisis. The implications of these events are alarming, with experts predicting that First Republic will be the next to fall as its stock plummeted by over 90% in the past two weeks. The impact of these failures has been substantial, resulting in a staggering $55 billion market cap wipeout for the four largest banks on Wall Street.
In response to these dire circumstances, the American government and global banks have rushed to protect their regional banking players with a $30 billion lifeline to First Republic as part of a rescue plan. Even the FDIC, the insurance safety net for depositors, has gone beyond its limit of $250K to provide coverage for SVB depositors, highlighting the sense of panic that has gripped regulators.
As if this were not enough, the collapse of Credit Suisse has sent shockwaves throughout the globe, fueling fears of a looming global banking crisis. Industry experts are pointing fingers at the regional banking players in America, warning of a massive crisis of market confidence as we approach the quarter end.
The inadequate control systems, coupled with risky portfolio exposures, duration bets, and depositor panic, have created a perfect storm that is shaking the foundations of the banking industry.
Jasper Colin's coverage via PitchPro and Watchdog on the crumbling banking systems is a stark reminder of the looming financial crisis that may be waiting just around the corner.
