Collapse of Silicon Valley Bank makes investors and banks tremble You have to do without these drugs until the middle of the year

The bankruptcy of the American start-up financier Silicon Valley Bank (SVB) sent a shock wave through the banking sector on Friday. The prices of the big money houses on Wall Street sometimes collapsed as investors withdrew their deposits. “Silicon Valley Bank is just the tip of the iceberg,” Christopher Whalen of financial advisory firm Whalen Global Advisors told Bloomberg. He’s not worried about the big companies, but the smaller ones “will take a big hit,” Whalen said.

Silicon Valley Bank (SVB) was forced to close Friday by a California regulator. According to insiders, an emergency capital increase was necessary after earlier billions in losses on the sale of a bond portfolio had failed. It is the largest bank failure in the US since the 2008 financial crisis. US Treasury Secretary Janet Yellen expressed her concern. There are “developments regarding some banks that I’m watching closely,” she said Friday before a congressional committee.

Trade in the newspapers of the institute, which promotes tech companies and start-ups, remained suspended on Friday. By Thursday, they had lost about 60 percent, pre-market losses of a similar amount had been announced.

Fears of widespread problems in the financial sector sent stocks in major US institutions lower. “Many banks have large bond portfolios and rising interest rates make them worth less. The SVB situation reminds us that many institutions are sitting with large unrealized losses on their fixed income holdings,” said Russ Mold, asset manager at AJ Bell. Former US Treasury Secretary Larry Summers described the industry mood as an “overreaction” , according to the “Welt”, he is not taking any systemic risk for the banking sector if the SVB crisis is handled wisely and customer deposits are paid out.

Collapse felt at other banks

The SVB-Aus at other banks did not go unnoticed: Goldman Sachs shares fell by as much as four percent, Morgan Stanley lost two percent and Bank of America almost one percent. Shares of JPMorgan, on the other hand, rose two percent after regulators intervened. Some analysts had called the price drop in the sector exaggerated. SVB’s problems are “too specific to apply to everyone,” said Ebrahim Poonawala, an analyst at Bofa Securities in New York.

In any case, the weakened wage growth allayed inflation concerns and investors’ fears of further sharp rate hikes by the US Federal Reserve on Friday. Nonfarm payrolls added 311,000 new jobs in the US in February, up from a revised 504,000 in January. Monthly wages rose at their slowest pace in 12 months.

Traders had been pricing in less than a 40 percent chance of a 50 basis point rate hike from the Fed this month, compared to a 50 percent chance earlier. That hurt the dollar. In return, the euro rose 0.6 percent to $1.0639. The yield on US ten-year bonds fell to just under 3.70 percent.

SMI having a bad week

The news from the US was also felt in Switzerland: the Swiss Market Index (SMI) ended an already bad week in the red on Friday. The SMI ended the day 1.68 percent lower at 10,765 points. It was the weakest week since September 2022 – with a weekly minus of 3.8 percent. The new annual low of 10,720 reached in the afternoon was even below the closing level at the end of 2022. Bank stocks lost in particular: the biggest loser was Credit Suisse, whose shares were still worth CHF 2.50 on Friday evening – an all-time low. Julius Baer and Partners Group also lost.

Used sources:

(paint/t online)