ICSM Business News: Silicon Valley Bank fallout continues as Credit Suisse sees collapse in share value as fears grow of a 'slow rolling crisis'
By Harry Mottram: Alarm bells are ringing across the banking world as more banks are hit by a lack of confidence in their long term viability following the collapse of two American banks last week. Since the demise in America of Signature Bank and Silicon Valley Bank banks around the world have seen falls in their share value as jitters have entered the markets. The latest bank to see an alarming slide in value is Credit Suisse whose share price has lost a quarter in a few days. Suisse Bank has been saved from collapse after taking a multi-billion pound bank loan.
Across the pond First Bank, Western Alliance Bancorp and PacWest Bancop have seen falls along with JP Morgan Chase, Citigroup and Bank of America. Black Rock’s CEO Laurence Fink said: “We’ve seen inflation move sharply higher to levels not seen since the 1980s. To fight this inflation, the Federal Reserve in the past year has raised rates nearly 500 basis points. This is one price we’re already paying for years of easy money – and was the first domino to drop.”
Worryingly he drew parallels with the USA Savings and Loan collapse in 1994 that prompted ‘slow rolling crisis,’ suggesting something akin to the start of the Credit Crunch in 2007 when saw a bank run at Northern Rock and the near collapse of the banking system.
Ian Carrotte of ICSM said shares in UBS in Switzerland were down nearly 7% while French banks BNP and Societe Generale saw 11% falls in value along with around 10% for Spanish bank Banco de Sabadell, Germany’s Deutsche Bank and Commerzbank.
“These are concerning times,” he said, “as all firms need banking facilities but the last thing you need is for a bank to fail as has already happened this month. For international businesses and those who bank abroad the idea that a bank could shut their doors and online portals is terrifying as it most cases that would be the end.
He said his advice was to spread any risk by banking with a major lender but also having some reserves with other accounts so if there were liquidity problems not all of a firm’s cash was tied up.
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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk