Banks in the doldrums

What led to the fall of Silicon Valley Bank, Signature Bank and Credit Suisse

The ongoing banking crisis in the US and Europe is a cause for concern for investors across the world. Hence, it is the focus of this month's Monthly Agenda. In the US, two financial institutions, Silicon Valley Bank (SVB) and Signature Bank, went bust. On the other hand, in Europe, a 167-year-old Swiss bank was acquired for a fraction of its market value. In each of these incidents, shareholders' wealth has been destroyed.

The fall of Silicon Valley Bank
Founded in 1983, Silicon Valley Bank (SVB) catered to venture-capital firms and venture-capital-backed startups. As of December 2022, it held total assets of $209 billion. The pandemic and the resultant work-from-home culture paved the way for tech startups to accumulate extra cash. This led to a surge in deposits at SVB.