The bank index of US markets fell north of 6.5% yesterday.
The reason for this?
Silicon valley bank which banks nearly half of the US tech industry was down 60% yesterday and is further down 20% from yesterday’s close after the bank raised nearly 2 billion dollars in equity and debt and also sold their 21 billion dollars mortgage backed securities (nearly 25% of their portfolio at a 1.8 billion loss)
Nearly 80 billion dollars wiped out from the bank’s market capitalisation in a day. (80 billion dollars = SBI)
This tweet thread explains nicely about what has happened in the bank
https://twitter.com/jamiequint/status/1633956163565002752?t=aJuFxr8vM2TGm3sjoFcVgw&s=19
Day before yesterday, one of the biggest crypto dedicated bank decided to shut down as FTX saga still continues to haunt the crypto space.
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https://twitter.com/deepakshenoy/status/1634023539631087616?t=0qWqlX75N589IHpXEvGghw&s=19
Deepak shenoy’s tweet also covers the crux of the story nicely.
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Repercussions of high interest rates in US now starting to kick in.
Most of the VC backed startups are at risk.
Yesterday 60% crash
Total 60% down open in pre market.
Exchange halted trading in the stock.
Incredible. It’s like 1.5 * SBI/ 1 hdfc bank got halted in a day
Bank closed! FDIC: PR-16-2023 3/10/2023
Depositors will get $250k by monday and rest as bankrupcy procedure.
Another fire started to fight by Central bankers
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Likes of Hindenburg were busy targetting Adani and Indian PSU banks and a bank failed in their own backyard.
Yeah, its really intriguing that banks failed just due to interest rate risk ( no scandal, no high bets on risky asset ,no NPAs etc).
I feel in todays world any thing can happen how fundamentally strong company may be. ZEEL with no debt of there own ( one small line in fine print don’t even know if that exist) leads to NCLT.
Equity is riskier than ever !! In two days bank is taken over by fdic, funds blocked.
So, the Americans attacked themselves…