Shares of so-called US regional banks are falling amid the cyclone created by the collapse of Silicon Valley Bank. The collapse of SVB was the cause of the collapse of the US Regional Banking System.
According to latest reports, Mar 13, 2023 Western Alliance, $WAL stock down 75%, First Republic, $FRC: (-65%), Zions Bancorp, $ZION (-43%), PacWest , $PACW (-41%), Comerica, $CMA (-33%) and Fifth Third, $FITB (-20%).
All eyes are now on FRC which is next in line, after SVB and Signature Bank. American President Joe Biden, although he tried to reassure American depositors on Monday by saying that “the American banking system is safe”, however, he almost disappeared after 2 minutes of speech without answering a question if he “can assure the American people that there will be a domino effect in the Regional Banking System and if it expects other banks to fail as well.”
The CEO of FCR, however, stated that withdrawals from the bank are moving at normal rates (business as usual) and this is what makes depositors and investors suspect that something is not right with this particular bank.
Goldman Sachs earlier bet that the Fed would avoid another rate hike in March, a rate hike that has sent Silicon Valley — where tech companies hold $160 billion in deposits — crashing.
As is well known, the policy of increasing interest rates implemented by Central Banks to limit inflation causes bonds to rise, creating liquidity problems for banks, which have been “loaded” with bonds since the time of the pandemic.