All eyes are on the other 4 200 US banks

24 Mar, 2023 - 00:03 0 Views
All eyes are on the other 4 200 US banks

eBusiness Weekly

The US Federal Reserve started to increase interest rates in March last year, and it was almost inevitable that banks would experience some strain, and that some would even fail.

However, few anticipated that within less than two weeks, three banks would collapse.

The failures of Silicon Valley Bank (SVB) and Signature Bank are especially concerning as they are the second and third-largest bank failures in US history, the largest being Washington Mutual Bank in 2008.

These failures were the first significant indication of trouble in the US economy since the interest rate hikes, causing global shockwaves in financial markets.

Several experts have preached that the failure of these banks was an isolated incident due to “unique” circumstances and that the problems are not systemic.

Kokkie Kooyman, a banking specialist at Denker Capital, also said in my interview with him on RSG Geldsake that he believes the aggressive selloff was overdone, adding that banks in developing markets are not affected and should not have reacted as negatively as they did.

Although this is somewhat reassuring, all eyes will remain on the other 4 200 US banks and whether they will follow suit.

The next few weeks will be interesting. Expect much more volatility, especially if several other banks hit the wall. — Moneyweb

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