# Banking crisis starting? **URL:** \ **Category:** Macro Economic Trends and Risks\ **Created:** [March 10, 2023, 11:32am UTC](https://discussion.fool.com/t/banking-crisis-starting/89733 "2023-03-10T11:32:44Z")\ **Posts on this page:** 9\ **Page:** 1
**Author:** ![Divitias](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/divitias/32/9302_2.png) [@Divitias](https://discussion.fool.com/u/Divitias)\ **Post date:** [March 10, 2023, 11:32am UTC](https://discussion.fool.com/t/banking-crisis-starting/89733/1 "2023-03-10T11:32:44Z")
Shares nose diving as the highly leveraged banking sector in the US ‘wobble’. I suspect the problem really lies in the derivative sector (interest rates probably) > **[London banking stocks tumble as Silicon Valley Bank shockwaves spread to...](https://www.cityam.com/london-banking-stocks-tumble-as-silicon-valley-bank-shockwaves-spread-to-hsbc-barclays-and-lloyds/)** > > A crisis at US start-up lender Silicon Valley Bank (SVB) has sent shockwaves across the Atlantic today and dragged down shares in London-listed lenders. Interest rate rises are crippling banks in Europe as well: > **[Swiss central bank posts biggest loss in its 116-year history](https://www.cnbc.com/2023/01/09/swiss-national-bank-posts-record-143-billion-loss.html)** > > The central bank took a massive hit on its large pile of foreign currency holdings as the Swiss franc strengthened. I’m glad I’ve been stacking the yellow stuff 🙂 ---
**Author:** ![Leap1](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/leap1/32/72176_2.png) [@Leap1](https://discussion.fool.com/u/Leap1)\ **Post date:** [March 10, 2023, 12:35pm UTC](https://discussion.fool.com/t/banking-crisis-starting/89733/2 "2023-03-10T12:35:12Z")
Dealbook NYT column by Andrew Ross Sorkin. The column has no link. snippet Blame interest rates for the mess. As the Fed has raised rates to combat inflation, the value of bonds that banks hold as assets has fallen. That’s normally not a problem, until banks need to sell those holdings to cover customer withdrawals. In SVB’s case, the bank disclosed late on Wednesday that it had sold $21 billion of its most easily sellable investments — crystallizing a $1.8 billion after-tax loss — and borrowed $15 billion. It also announced plans to [raise $2.25 billion](https://nl.nytimes.com/f/a/bNN6urykg5gvNczbwvXgIA ~~/AAAAAQA~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~~ ) through an emergency sale of stock. That news spurred customers to start pulling deposits; investors, already unnerved by the collapse of the crypto-focused lender Silvergate, followed suit, driving SVB’s stock down 60 percent yesterday. It’s down about 40 percent in premarket trading this morning. ---
**Author:** ![Divitias](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/divitias/32/9302_2.png) [@Divitias](https://discussion.fool.com/u/Divitias)\ **Post date:** [March 10, 2023, 3:44pm UTC](https://discussion.fool.com/t/banking-crisis-starting/89733/3 "2023-03-10T15:44:12Z")
This hasn’t helped: > Peter Thiel’s Founders Fund and several other high-profile venture capital firms advised their portfolio companies to pull money from Silicon Valley Bank on Thursday, responding to panic about the bank’s financial situation in tech startup circles. > **[Peter Thiel Fund advises companies to exit Silicon Valley Bank](https://www.livemint.com/news/world/peter-thiel-fund-advises-companies-to-exit-silicon-valley-bank-11678456061549.html)** > > Coatue Management, Union Square Ventures and Founder Collective advised their portfolio companies to pull their money from the bank ---
**Author:** ![bjurasz](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/bjurasz/32/7233_2.png) [@bjurasz](https://discussion.fool.com/u/bjurasz)\ **Post date:** [March 10, 2023, 5:02pm UTC](https://discussion.fool.com/t/banking-crisis-starting/89733/4 "2023-03-10T17:02:18Z")
And now regulators have shut down Silicon Valley Bank. This is a heavily used bank in the VC arena. This is not a small potatoes thing. ---
**Author:** ![Divitias](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/divitias/32/9302_2.png) [@Divitias](https://discussion.fool.com/u/Divitias)\ **Post date:** [March 10, 2023, 6:26pm UTC](https://discussion.fool.com/t/banking-crisis-starting/89733/5 "2023-03-10T18:26:49Z")
KBW Nasdaq Bank Index is currently down 4% after dropping by over 10% earlier today: [https://indexes.nasdaqomx.com/Index/Overview/BKX](https://indexes.nasdaqomx.com/Index/Overview/BKX) ---
**Author:** ![Goofyhoofy](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/goofyhoofy/32/4721_2.png) [@Goofyhoofy](https://discussion.fool.com/u/Goofyhoofy)\ **Post date:** [March 11, 2023, 12:25am UTC](https://discussion.fool.com/t/banking-crisis-starting/89733/6 "2023-03-11T00:25:10Z")
No, I don’t see a banking crisis starting. I’m not surprised that a bank was depositing long and trying to withdraw short, we see that sort of thing all the time. The question for me is how dumb were they not to see where interest rates were going and what that would do to bonds? I meant it’s only been on the telegraph wires for about a year. And this is a bank, although large, which specializes in a niche area of banking: servicing VC and “new” companies which are not important players in the (financial) world today. Tomorrow, yes, but a recession always puts that on hold for a while. It’s possible, I suppose, that some kind of contagion happens, but frankly I don’t see it outside a minor inconvenience for regulators and a bunch of lost dough for the VC industry, which is pretty used to losing money here and there. {edited to include this Barron’s piece I just ran across) > **[Why the SVB-Triggered Selloff Is a Buying Opportunity in Big Bank Stocks](https://www.barrons.com/articles/bank-stock-buy-svb-52ee8b9e)** > > Larger financial institutions have different funding sources and are subject to much tighter regulation. ---
**Author:** ![PucksFool](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/pucksfool/32/47955_2.png) [@PucksFool](https://discussion.fool.com/u/PucksFool)\ **Post date:** [March 11, 2023, 1:50am UTC](https://discussion.fool.com/t/banking-crisis-starting/89733/7 "2023-03-11T01:50:18Z")
I am sure they sold shares so their $,$$$,$$$ could spend time with their family. > ---
**Author:** ![jerryab2](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/jerryab2/32/3274_2.png) [@jerryab2](https://discussion.fool.com/u/jerryab2)\ **Post date:** [March 11, 2023, 2:50am UTC](https://discussion.fool.com/t/banking-crisis-starting/89733/8 "2023-03-11T02:50:42Z")
Clawback might be the word–and action–taken by FDIC. ---
**Author:** ![Divitias](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/divitias/32/9302_2.png) [@Divitias](https://discussion.fool.com/u/Divitias)\ **Post date:** [March 11, 2023, 11:01am UTC](https://discussion.fool.com/t/banking-crisis-starting/89733/9 "2023-03-11T11:01:02Z")
> [@Goofyhoofy](#): > > No, I don’t see a banking crisis starting. I’m not surprised that a bank was depositing long and trying to withdraw short, we see that sort of thing all the time. The question for me is how dumb were they not to see where interest rates were going and what that would do to bonds? I hope that you are right. Both Silvergate and SVB were in a niche market. SVB in particular was cash rich and forced to seek out the best returns which, unfortunately, turned out to be long dated bonds. However, any bank that was forced to liquidate assets to pay back depositors would face similar problems at the moment.