TIMELINE: 10 key facts about the global banking crisis

On March 22,Federal Reserve Chair Jerome Powell stated that SVB's bankruptcy is not a sign of deeper flaws in the financial system.

10 facts about the global bank crisis

TIMELINE: 10 key facts about the global banking crisis

Due to the global banking crisis, which is regarded as the worst since 2008, banks and financial institutions around the world underwent a significant negative transition in just 10 days. It all began with SiliconValley Bank's failure, or SVB, and Credit Suisse experienced a severe loss of confidence, which caused its stock and bond prices to plummet.

But the reason behind the banking crisis is still a mystery. The global banking crisis in ten points is as follows:

Timeline of Global Banking crisis:

1 - On March 8, Silvergate Capital Inc., a bank that supports cryptocurrencies, announced it would gradually wind down operations and voluntary liquidate. Silicon Valley Bank (SVB) announced on the same day that it intended to raise $2.25 billion in preferred convertible shares and common equity.

On March 9, the S&P 500 bank index fell when news of SVB and Silvergate's plans to wind down operations broke.

The 60% decline in SVB stock forced the bank to reassure its customers that their money was secure.

2 - A California regulator shut down SVB on March 10 and named the Federal Deposit Insurance Corporation (FDIC) as receiver. The choice caused the shares of US banks to plummet, with regional institutions being the main victims.

First Republic Bank and Western Alliance reassured investors that their liquidity and deposits were strong amid spillover.

On March 12, US Treasury Secretary Janet Yellen stated that she was coordinating with banking regulators to address the SVB collapse. The consumers of SVB will have access to their money, US officials later declared. The New York-based Signature Bank was then taken over by the state of New York's Department of Financial Services.

 

3 - On March 13th, HSBC paid a price of one pound to buy the UK business of SVB. The FDIC reported that it has moved all of SVB's deposits to a recently established bridge bank.

Shares of regional US banks fell on the same day, with First Republic topping the pack.

Because of the ongoing, higher-than-normal demand for money, US Federal Home Loan Banks forced them to increase their lending war chests in order to provide additional liquidity to banks.

 

4 - On March 14, Moody's Investors Service changed the outlook it had for the US banking sector from "stable" to "negative." High risk was cited as the reason for the downgrade.

 

5 - The ailing Swiss juggernaut Credit Suisse announced on March 15 that it will borrow up to 50 billion Swiss francs (about $54 billion) from the Swiss National Bank to increase its liquidity.

Yellen had then told the US Senate that only institutions that were considered a threat to contagion would offer guarantees for uninsured deposits. The comments caused anxiety over smaller banks.

Large American banks injected $30 billion into First Republic Bank to support the lenders' finances.

 

6 - SVB Financial Group submitted a Chapter 11 bankruptcy petition on March 17.

 

7 - After much deliberation, UBS decided to purchase CreditSuisse on March 19 for 3 billion Swiss francs in stock. Moreover, it consented to take on losses of up to 5 billion francs.

 

8 - On March 20, the FDIC made the decision to dissolve SVBby conducting two separate auctions for its private bank and traditional deposits segment. After failing to locate a buyer for the lender, the decision was made.

Then, Yellen had informed the banking community that she was prepared to step in to defend depositors at smaller American banks. Investors' concerns were further heightened when she informed lawmakers that she had not thought about or discussed "blanket insurance" for US banking deposits without consent from Congress.

 

9 - On March 22, Federal Reserve Chair Jerome Powell stated that SVB's bankruptcy was not a sign of broader banking sector flaws.

 

10 - On March 24, Deutsche Bank stock prices fell 8.4% in Europe. The price of protecting the company's bonds against default risk increased as a result. That affected the equities of other European banks as well.

 

Reuters provided inputs. Thanks for reading, please share this article if you think its healpful and leave your valuable comment bellow.