The biggest bank failures in modern history
Silicon Valley bank collapsed at an incredible rate, and two more institutions went bankrupt in the last week.
One of them, Signature Bank, became the third-largest affected bank in US history. Other - Silvergate Capital, bank, announced the closure of operations and the return of assets to depositors. This bank has been heavily influenced by the crypto sector.
While U.S. banking regulators have taken emergency action to prevent the risk of contagion, many are wondering, what might happen next. Based on Federal Deposit Insurance Corporation data (FDIC) The chart above shows more 500 bank failures with 2001 of the year.
Top 20 bank failures since 2001 of the year
Last time, when the big bank crash happened, followed by a spate of bank closures.
After the end 2007 banks reported billions in losses on subprime mortgages, sentiment began to change. When in 2008 year losses grew like a snowball, this caused a flight from the shadow banks - institutions, which are not regulated, like banks, but do the same.
At that time, banks and shadow banks held mortgage loans as collateral., foreclosed. At that time it was also difficult to determine the value of these assets.. The credit crisis triggered a wave of bank failures.
Here 20 largest bank failures in the last two decades:
Banks, collapsing in the last days, held US Treasuries as collateral. They fell in price due to a sharp increase in interest rates. Their customer bases are also concentrated, which reduces diversification. Just, how served the niche of technology startups, backed by venture capital, Silvergate Capital has worked primarily with high-risk crypto firms.
Since these banks invested in long-term bonds, when interest rates were historically low, it was a reflection of misguided risk management and the assumption, that interest rates will remain at this level.
What's going on now?
US banking regulators showed, that they are serious about preventing any consequences in the future.
Together Federal Reserve System, US Treasury and FDIC Take Emergency Action, to give all Silicon Valley Bank and Signature Bank depositors access to their funds on Monday, 13 Martha. This happened after the auction on the weekend, resulting in no buyers.
JPMorgan Chase, Morgan Stanley and Royal Bank of Canada are among the banks, who were initially interested, but retreated after a comprehensive review. A second auction is currently scheduled.
Regulators took swift action to pay savers, referring to that, that Silicon Valley Bank and Signature also introduced a "similar systemic risk exclusion". Although both banks were not included in the list of systemically important banks of the Financial Stability Board , regulators have taken action.
Interesting, that last year the Federal Reserve assessed banks, who passed the recession stress test. Neither Silicon Valley Bank, neither Signature Bank were found in
