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How the 2023 banking crisis unfolded
Global Banking & Finance Review®
Company
(Reuters) – Global banks are staring at the biggest crisis since 2008 after two U.S. lenders collapsed, Switzerland’s Credit Suisse sought a government lifeline and America’s top banks agreed to offer a $30 billion rescue deal – all in the space of 10 days.
(Reuters) – Global banks are staring at the biggest crisis since 2008 after two U.S. lenders collapsed, Switzerland’s Credit Suisse sought a government lifeline and America’s top banks agreed to offer a $30 billion rescue deal – all in the space of 10 days.
The turmoil has ratcheted up fears of a contagion and prompted action from the U.S. Federal Reserve, U.S. Treasury and the private sector, but it remains to be seen whether that will be enough to contain the damage.
Below is a timeline of key events:
Date Development
March 8 Silicon Valley Bank (SVB) says it intends to raise
$2.25 billion in common equity and preferred
convertible stock.
March 9 The S&P 500 bank index tumbles following SVB’s
announcement and crypto bank Silvergate’s decision
to wind down operations. SVB stock collapses by
60%, leading the company to scramble to reassure
its clients their money was safe.
March 10 A California regulator shuts SVB and appoints the
Federal Deposit Insurance Corporation (FDIC) as
receiver. U.S. bank stocks extend losses with
regional lenders hit the hardest.
U.S. lenders First Republic Bank and Western
Alliance say their liquidity and deposits remained
strong, aiming to calm investors worried of a
spill-over.
SVB CEO Greg Becker leaves the board of directors
at the Federal Reserve Bank of San Francisco.
U.S. Treasury Secretary Janet Yellen meets with
banking regulators on the collapse of SVB.
March 11 The U.S. Federal Reserve and the FDIC weigh the
creation of a fund that would allow regulators to
backstop more deposits at banks, Bloomberg News
reported.
March 12 Yellen says she is working closely with banking
regulators to respond to the SVB collapse. U.S.
officials later say SVB customers will have access
to their deposits.
New York state’s Department of Financial Services
takes possession of New York-based Signature Bank.
March 13 HSBC acquires the UK subsidiary of Silicon Valley
Bank for 1 pound.
The FDIC says it has transferred all deposits of
SVB to a newly created bridge bank.
U.S. President Joe Biden says the administration’s
actions should give Americans confidence that the
banking system is safe.
Western Alliance Bancorp says more than 50% of its
total deposits were insured and it has over $25
billion of cash reserves. Shares of U.S. regional
banks slump, led by First Republic, while credit
risk indicators flash red as investors worry about
contagion risks.
U.S. Federal Home Loan Banks beef up their lending
warchests to provide more liquidity to banks amid
continued higher-than-usual demand for funds.
March 14 Moody’s Investors Service revises its outlook on
the U.S. banking system to “negative” from
“stable”, citing heightened risks.
U.S. prosecutors investigate the collapse of SVB,
a source familiar with the matter told Reuters.
March 15 Troubled Swiss giant Credit Suisse says it will
strengthen its liquidity by borrowing from the
Swiss National Bank up to 50 billion Swiss francs
($54 billion).
March 16 Yellen tells a U.S. Senate hearing that uninsured
deposits would only be guaranteed in banks deemed
a contagion threat, raising fears about smaller
banks.
Large U.S. banks inject $30 billion in deposits
into First Republic Bank to shore up the lender’s
finances.
March 17 SVB Financial Group files for Chapter 11
bankruptcy protection.
March 18 UBS is examining a takeover of Credit Suisse that
could see the Swiss government offer a guarantee
against the risks involved, say two people with
knowledge of the matter.
March 19 UBS agrees to buy Credit Suisse for 3 billion
Swiss francs in stock and agrees to assume up to 5
billion francs in losses.
March 20 The FDIC decides to break up SVB and hold two
separate auctions for its traditional deposits
unit and its private bank after failing to find a
buyer for the lender.
March 21 U.S. Treasury Secretary Janet Yellen tells bankers
that she is prepared to intervene to protect
depositors in smaller U.S. banks.
March 22 Yellen tells lawmakers that she has not considered
or discussed “blanket insurance” to U.S. banking
deposits without approval by Congress, again
stirring up investor worry. Federal Reserve Chair
Jerome Powell says SVB’s failure is not indicative
of wider weaknesses in the banking system.
March 24 Deutsche Bank shares drop 8.4% in Europe and the
cost of insuring the company’s bonds against the
risk of default spike. Other banking stocks also
slump in Europe.
Sources: company statements, press conferences, sources, media reports
(Reporting by Mehnaz Yasmin amd Manya Saini in Bengaluru; Editing by Devika Syamnath)
A financial crisis is a situation in which the value of financial institutions or assets drops rapidly, leading to a loss of confidence and potential economic downturn.
A credit crunch occurs when there is a sudden reduction in the general availability of loans or credit, often leading to a slowdown in economic activity.
The banking system refers to the network of institutions that provide financial services, including accepting deposits, making loans, and facilitating payments.
Financial stability is a condition in which the financial system operates effectively, with institutions able to withstand shocks and maintain the flow of funds.
Investment portfolios are collections of financial assets such as stocks, bonds, and other securities held by an individual or institution to achieve specific financial goals.
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