US and Asian equity markets slid (treasuries gained as safe-haven) as Silicon Valley Bank announced plan to raise $2.25 billion worth of capital after incurring losses on its portfolio, which included holdings of US Treasuries and MBS. Aggressive rate hikes by the Fed left SVB with lower interest yielding bonds – which couldn’t be sold without incurring losses. Additionally, an undiversified depositor base tapping onto their funds has pushed the bank towards a potentially weaker financial shape. Risks have risen in the short term for small and medium sized banks whose depositor base is usually less diversified.
March 10, 2023