Banking Crisis In US and Europe!


2023-04-25 08:51:35

Silicon Valley Bank (SVB), which served tech start-ups, shut down after a rapid slide in deposits. Its clients were struggling to raise cash, thanks to a tech downturn, and had to withdraw deposits. SVB’s stock plunged by 60%, wiping out over $80 billion in value. Following this New York based Signature Bank crashed. Credit Suisse, the big EU bank, had share price crashed. Stock markets fell around the world, yields for US Treasuries and Eurozone bonds dropped, and gold prices renewed their rally.  

Swiss central bank has since stepped in with $54 billion support for Credit Suisse - a first since the 2008 financial crisis. In trouble is also The First Republic Bank whose stock prices crashed by 70%. US banks have since injected $30 billion into its deposits. Ratings agency has Moody’s cut its outlook for the entire banking system to negative from stable.  

Corporate defaults are also rising. S&P Global says US and European default rates to reach 3.75% to 6%. Goldman Sachs has lowered its forecast for fourth-quarter US GDP growth because of risks that smaller banks will pull back on loans to preserve liquidity in the face of the potential banking crisis.