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Banking Industry health after Silicon Valley Bank collapse: Difference between revisions
Banking Industry health after Silicon Valley Bank collapse (view source)
Revision as of 20:25, 16 March 2023
, 16 March 2023→Mark to Market Losses
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The median value of banks’ unrealized losses is around 9% after marking to market. The 5% of banks with worst unrealized losses experience asset declines of about 20%. We note that these losses amount to a stunning 96% of the pre-tightening aggregate bank capitalization. | The median value of banks’ unrealized losses is around 9% after marking to market. The 5% of banks with worst unrealized losses experience asset declines of about 20%. We note that these losses amount to a stunning 96% of the pre-tightening aggregate bank capitalization. | ||
Market to market losses alone did not cause the recent problem | |||
Out of the 10 largest insolvent banks ( A bank is considered insolvent if the mark-to-market value of its assets – after paying all uninsured depositors -- is insufficient to repay all insured deposits), 1 has assets above $1 Trillion, 3 have assets above $200 Billion (but less than $1 Trillion), 3 have assets above $100 Billion (but less than $200 Billion) and the remaining 3 have assets greater than $50 Billion (but less than $100 Billion). | * SVB does not stand out as much in the distribution of marked to market losses. About 11 percent of banks suffered worse marked to market losses on their portfolio (Figure 2). In other words, if SVB failed because of losses alone, more than 500 other banks should also have failed. | ||
Other relatively big banks could also be in danger, the research did not disclose names | |||
* Out of the 10 largest insolvent banks ( A bank is considered insolvent if the mark-to-market value of its assets – after paying all uninsured depositors -- is insufficient to repay all insured deposits), 1 has assets above $1 Trillion, 3 have assets above $200 Billion (but less than $1 Trillion), 3 have assets above $100 Billion (but less than $200 Billion) and the remaining 3 have assets greater than $50 Billion (but less than $100 Billion). | |||
=== The Role of Uninsured Leverage === | === The Role of Uninsured Leverage === | ||