Silicon Valley Collapse Led U.S Traditional Banks to Risk?
- Over 186 banks were at risk as Silicon Valley.
- Wall Street banks to lose nearly $165 billion in market cap.
In the aftermath of the Silicon Valley Bank (SVB) collapses on March 10, 186 banks were identified as being at risk, as per recent research. These banks are dealing with problems equivalent to those that led to Silicon Valley Bank’s demise. Federal Reserve’s rapid rate-hike campaign reducing the bank’s assets, SVB stock fell earlier this week. As a result, customers became frightened and withdrew their unsecured deposits.
In a report published this week on the Social Science Research Network, the economists analyzed how much market value individual U.S. banks’ asset books had lost over the Fed’s aggressive rate-increasing. Also, they examined asset books and market value losses and concentrated on uninsured depositors who held over $250,000 in accounts, as per the WSJ report.
Stock Market Under Weight of Liquidity
Fears over Credit Suisse’s financial stability and the effects of the greatest US bank failure since 2008 have caused the six top Wall Street banks to lose nearly $165 billion in market capitalization this month, or 13% of their total value.
Investors do not expect the top US institutions will face the same fate as Silicon Valley Bank, which was forced to liquidate a portfolio of securities at a $2bn loss when consumers pulled out their cash. On Wednesday, the largest stock declines occurred in Citigroup (NYSE: C ) and Morgan Stanley (NYSE: MS ), while Bank of America (NYSE: BAC ) shares hit a more than two-year low.
Also, investors’ expectations of compression in profits are hurting the three banks as well, Goldman Sachs (NYSE: GS ), JPMorgan Chase (NYSE: JPM ), and Wells Fargo (NYSE: WFC ). Further, expectations for a Fed pause interest rate next week have helped Gold rise while the Dollar fell.
However, following the traditional bank crisis the global crypto market signals recovery. The largest cryptocurrency Bitcoin (BTC) reached the $27K range and soared over 7% in a day and 33% in a week. Also, the biggest Altcoin Ethereum (ETH) jumps to the $1.8K mark. And surged about 7% in the last 24 hours and 24% in a week.
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