5 banks, 2 weeks: How the banking crisis unfolded

Paris: After three US regional lenders collapsed and UBS swooped to buyout troubled Credit Suisse to avoid a wider crisis, AFP looks back at the last two weeks of banking turbulence: Silvergate Bank The turmoil begins the night of 8 March with a liquidation announcement from Silvergate Bank, a US regional lender and favourite among the cryptocurrency crowd. **Also Read: Which will be the next bank to fail? The man who predicted the 2008 Lehman Brothers collapse has the answer** The California business had been swept up in several crypto mishaps, particularly the implosion of exchange platform FTX, before facing a wave of sudden withdrawals. On 10 March the crypto banking giant says it plans to close. Silicon Valley Bank On the same night of 8 March, Silicon Valley Bank announces it is facing a huge run of unexpected withdrawals. In an attempt to raise cash, the bank loses $1.8 billion (Rs 14.8 lakh crore) in the sale of a bond portfolio whose value dropped following interest rate hikes by the US Federal Reserve. SVB, a key lender to startups across the US since the 1980s and the country’s 16th-largest bank by assets, had been hit by the tech sector slowdown as cash-hungry companies rushed to get their hands on their money. [caption id=“attachment_12324092” align=“alignnone” width=“640”] According to Bloomberg, regulators have been unable to find a buyer for SVB and are now considering breaking up the bank. AP[/caption] The announcement by SVB spooks investors and clients, and sparks a run on deposits. On 10 March the bank collapses — the biggest US banking failure since the 2008 financial crisis — prompting regulators to seize control the same day. The Federal Deposit Insurance Corporation (FDIC) takes over the bank and says it will protect insured deposits — those up to $250,000 (Rs 2.06 lakh crore) per client. **Also read: Will Silicon Valley Bank collapse impact India?** In a statement on 12 March, the Federal Reserve, the Treasury Department and the FDIC step in, announcing that SVB depositors will have access to “all of their money” starting Monday 13 March, and American taxpayers will not have to foot the bill. So far regulators have been unable to find a buyer for SVB and are now considering breaking up the bank, according to Bloomberg. Signature Bank The 12 March statement also reveals that Signature Bank, the 21st-largest in the United States, has been automatically closed and its customers will benefit from the same measures as those at SVB. **Also Read: Bitcoin at 9-month high following SVB, Signature Bank collapse, rose 26% just last week** On 19 March the FDIC says it has struck a deal to sell most of the assets of Signature Bank to Flagstar Bank, a subsidiary of New York Community Bancorp. Signature Bank held deposits of $88.6 billion **(**Rs 7,32 lakh crore) as of 31 December, the FDIC statement says, adding that the bank’s 40 branches will open under Flagstar on Monday. First Republic Bank San Francisco-based First Republic Bank — the 14th largest US bank by assets — sees its stock market valuation plunge as of 9 March and its shares tumble over the next week. On 16 March, Wall Street titans including JP Morgan, Bank of America and Citigroup pledge to deposit $30 billion (Rs 2.47 lakh crore) into the lender. [caption id=“attachment_12324102” align=“alignnone” width=“640”] Despite the bailout, ratings agency Standard & Poor’s (S&P) downgraded First Republic’s long-term issuer credit rating from BB+ to B+ on Sunday. AP[/caption] But despite the rescue package, on Sunday ratings agency Standard & Poor’s (S&P) downgrades First Republic’s long-term issuer credit rating from BB+ to B+. The agency warns it could further lower the bank’s rating if there is no progress in stabilising deposits. First Republic Bank makes assurances that with the $30 billion injection the lender is “well positioned to manage short-term deposit activity.” Credit Suisse On 15 March the shares of Credit Suisse , Switzerland’s second-largest bank and considered the “weakest link” in the Swiss banking sector, go into freefall.

In a bid to calm the markets, Credit Suisse announces it will borrow $54 billion (Rs 4.46 lakh crore) from the Swiss central bank to reinforce the group. After recovering some ground on 16 March, Credit Suisse shares close down eight per cent the next day at 1.86 Swiss francs as the Zurich-based lender struggles to regain investors confidence. In a crunch weekend, UBS — Switzerland’s biggest bank — says Sunday it will buy Credit Suisse for $3.25 billion (Rs .26 lakh crore) in hopes of stopping a wider international banking crisis. The takeover will create a banking giant unprecedented in the history of Switzerland, where banking is a core part of the national identity. Read all the Latest News , Trending News , Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.