Market history · Banking ·
Silicon Valley Bank fails
On 10 March 2023 California regulators closed Silicon Valley Bank after depositors tried to withdraw around $42 billion in a day. The bank had lost heavily on long-dated bonds bought when rates were low, and its deposit base was concentrated in uninsured accounts.
Signature Bank failed two days later. US authorities took extraordinary steps to protect all depositors and to provide liquidity to other banks, and the contagion was contained in the US, though it soon reached Europe.
The takeaway
Interest-rate risk and funding concentration can bring down an apparently well-capitalised institution very quickly.
Sources
This is a retrospective about a past event, provided for general information. It is not investment advice, does not describe RockLake's positioning at the time, and past performance is not a guide to future performance. Read the risk warning.