Silicon Valley Bank: global banking shares slide as fallout spreads
Markets on both sides of the Atlantic failed to be reassured on Monday by government intervention as the fallout from the rapid collapse of Silicon Valley Bank prompted a heavy sell-off of bank shares.
Joe Biden sought to bring calm at the start of the week, saying: “Americans can rest assured that the banking system is safe, their deposits are safe … we will not stop at this, we will do whatever is needed.”
On Sunday, regulators announced the closure of a second bank, the New York-based Signature. Depositors in Signature and SVB are protected by the overnight federal intervention, along with any other that runs into difficulties, but investors in both have been wiped out.
Wall Street opened down, with the Dow Jones down 0.8%, S&P 500 down 1% and the Nasdaq down 0.8%. In Europe the FTSE 100 was down 2.5%, Italy’s FTSE Mib was down 4.5%, Germany’s Dax was down 3.3% and France’s Cac was off 3.2%.
Bank shares were among the biggest fallers, with Bank of America, Barclays and Standard Chartered all down 7%. Charles Schwab was down by a quarter.
Signs that the crisis is spreading came before markets opened in New York, with San Francisco-based First Republic shares losing 70% of their value in premarket trading after declines of 33% last week.
Shares in PacWest Bancorp, headquartered in Los Angeles, dropped 53%, and Western Alliance Bancorp, based in Phoenix, Arizona, lost 29% in the premarket. Zions Bancorporation, based in Salt Lake City Utah, shed 11%. KeyCorp, based in Cleveland, Ohio, fell 10%.
First Republic and PacWest have exposure to venture capital clients in the tech sector, the same area of investment that was exposed by Silicon Valley Bank’s collapse. A senior US Treasury official told Bloomberg that other institutions
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