The collapse of the Silicon Valley Bank has serious consequences for the US banking landscape. Investors withdraw their money from the small banks and bring it to the big banks. That becomes problematic. A wave of bank failures threatens to sweep across the United States.
The Americans obviously learned their lessons from the financial crisis of 2008/2009. In times of crisis, when the banks get into trouble, it is better to keep your money with those credit institutions that are “to big to fail”. There one can assume that they will be rescued (once again) in an emergency.
Silicon Valley Bank’s customer withdrawal made history.
$42 billion was withdrawn Thursday.
That’s $4.2 billion an hour.
Previous largest bank run in modern U.S. history was Washington Mutual bank in 2008, and totalled $16.7 billion over 10 days.
History is being written.
— Genevieve Roch-Decter, CFA (@GRDecter) March 13, 2023
So it’s no wonder that, according to a report by the Financial Times, the bank run in the United States is continuing and deposits are being withdrawn from more and more smaller banks. The big banks are benefiting by receiving tens of billions of dollars in capital inflows. It can now be assumed that we will see a wave of bank insolvencies in the USA.
According to the FT report, “Major US banks are being inundated with requests from customers trying to move funds from smaller lenders as the collapse of Silicon Valley Bank leads to what executives call the largest movement of deposits in more than one denote decade.” It continued, “JPMorgan Chase, Citigroup and other major financial institutions are trying to accommodate customers who want to transfer their deposits quickly and are taking additional steps to expedite the normal sign-up or “onboarding” process, according to several people familiar with the matter Persons.”
It can be assumed that the collapse of the many smaller banks in the United States will also lead to further economic upheavals, since many small and medium-sized companies hold their accounts there in addition to private households. Entire regions, especially in rural areas, could suffer.