ICSM Business News: concerns mount as more US banks see share prices collapse in what is ‘a 21st century problem that leaves all banks vulnerable’
By Harry Mottram: The Treasury has moved to reassure customers of British banks that their money is safe following the news of continued turmoil in the USA banking sector.
"The UK banking system remains safe, sound and well capitalised," said a member of the Treasury last week in order to calm fears. They added the collapse of banks in America was "a matter for US authorities".
The comments came on the back of the collapse of the Silicon Valley Bank and the Signature Bank last month which caused a knock-on effect hitting Credit Suisse which in turn had to be rescued by UBS in Switzerland.
Whether the UK is immune from the bank runs is open to question despite the assurances of the Treasury but there are concerns mounting once again as this week shares in California-based PacWest plunged 50%, while Western Alliance also tumbled nearly 40%. The US Treasury Department said it was monitoring developments "closely" and “the banking system has substantial liquidity and deposit flows are stable.”
ICSM’s Ian Carrotte said members of the credit intelligence group that seeks to prevent late payment and insolvencies were always wary of statements by the authorities about the liquidity of banks. He said: “Many of us can recall the run on the Northern Rock bank in the day – people including those with business accounts queued up to get their cash out like in the film It’s A Wonderful Life. Now I understand the recent liquidity problems has been caused by customers able to withdraw or move money from accounts online in a matter of minutes. The word gets round thanks to the internet and before you know it millions of dollars are shifted to other banks. It’s a 21st century problem – in the old days the banks would close their doors so money couldn’t be taken out. The practice is handy on the day to day workings of a business but it can in those circumstances leave all banks vulnerable.”
The average SME has more than £100,000 in banking funds – which is higher that the £85,000 limit guaranteed by the Financial Services Compensation Scheme in the event of a bank going bust.
++++++++++++++++++++++++++++++++
ICSM CREDIT
For information on ICSM visit www.icsmcredit.com or call 0844 854 1850.
ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.com. Ian.carrotte@icsmcredit.com
About ICSM Credit
ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel - while at the moment there's a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach - ask for details from Paul.
For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.
To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com
For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk