Published on 21 Mar 2023 on Zacks via Yahoo Finance
Wall Street has been busy with the banking crisis in the past 10 days and even impacted the global markets adversely. It all started with the failure of Silicon Valley Bank (SVB) and Signature Bank. The run SVB started on Mar 9, after the bank’s strategic update to investors on Mar 8 revealed that it had sold substantially all of its Available for Sale securities portfolio of $21 billion, most of which were US treasury bonds.
SVB had locked these treasuries at a yield of 1.79% and had to book a loss of $1.8 billion on this transaction due to spike in Fed Funds rates past year. Clients started withdrawing their deposits. The very news crashed SVB stock, sending ripple effects across the banking industry.
U.S. regulators shut the bank down. It is the second-largest bank failure in U.S. history. Then, Signature Bank customers withdrew more than $10 billion in deposits, leading the U.S. regulators to seize Signature Bank in third-biggest bank failure in U.S. history.