March 2023 — an eventful month so far
Giving us a crush course in banking/financial literacy
Top of the news: the collapse of Silicon Valley Bank (SVB)
(Founded in 1983, SVB became the biggest bank in Silicon Valley.
And one of the largest in United States.)
Financial reporting in WSJ, and other publications, attributes its
collapse to various factors — some starting as early as 2020
But what sealed its fate was the bank run.
What is a bank run?
Panic-driven bank customers withdrawing their deposits.
That’s what happened on March 10th.
$42 billions in deposits were withdrawn from SVB
Yes, in ONE day
In one day $42 billions left the bank.
The bank collapsed
And was taken over by FDIC
One more thing: just few days before the collapse, SVB
was ranked (Forbes) as one of America’s Best Banks.
For the 5th straight year.
Interesting, isn’t it?
Across the pond things aren’t going that well, either.
Credit Suisse, Switzerland’s second-largest bank has been
having many problems
And it was faced with a bank run as well.
Bank’s customers pulled out over $121 billion in deposits
(It happened over a 3 months period.)
This “bank virus” is contagious
Financial stocks lost billions in market value
Harsh lessons for all to learn
Thanks for visiting.