Early this morning, Asian bank shares fell sharply as concerns grew over the impact of Silicon Valley Bank’s (SVB) bankruptcy on the global financial system. SVB, a US-based bank specializing in lending to technology startups, recently announced its closure, causing major disruptions to the banking industry.
HSBC Holdings and Standard Chartered shares fell more than 1 percent in trading on the Hong Kong Stock Exchange, while Mitsubishi UFJ shares fell nearly 4 percent and Sumitomo Mitsui Financial Group shares tumbled nearly 5 percent on the Tokyo Stock Exchange. Similarly, DBS Bank Equities and shares of OCBC Bank both fell in trading at the Singapore Stock Exchange.
The California Department of Financial Protection and Innovation announced the closure of SVB over the weekend, which caused a significant impact on the banking industry. Later, the United States shut down Signature Bank, a major bank lending to the cryptocurrency industry, in an effort to prevent risks in the banking system.
As a result, the market capitalization of US banks lost more than $100 billion over the weekend following SVB’s bankruptcy, while the market capitalization of European banks lost about $50 billion. The impact was felt across global markets as investors scrambled to reassess the risks of banking and lending to high-risk industries.
In response to the situation, the US Treasury Department confirmed that citizens depositing at SVB Bank and Signature Bank have full access to their deposits. Additionally, the US Federal Reserve (Fed) announced that it will establish a “Bank Term Funding Program” aimed at protecting financial institutions from the impact of the SVB bankruptcy. The Fed will offer one-year loans to commercial banks, depository institutions, credit unions, and other types of financial institutions to prevent a potential collapse of the banking system.
The situation remains volatile, and market analysts are closely monitoring the developments to determine the long-term impact on the financial system.