banking

Our previous article on the banking crisis looked at Silicon Valley Bank’s (SVB) 2022 10-K to determine the reason for their failure. Our analysis revealed that the bank’s customers had fewer deposits, and its debt portfolio incurred mounting losses due to inadequate risk management. Both of these situations were largely attributed to Silicon Valley Bank’s inability to respond to rising interest rates. So the next question in the banking crisis of 2023, is this crisis just limited to Silicon Valley…

Silicon Valley Bank has entered into FDIC receivership and has for all intents and purposes failed. Here, I argue that SVB failed due to a failure to respond to rising interest rates that impacted both their customer deposits and their investment valuation; and this risk wasn’t well understood in the wider market due to the accounting treatment of their investments.