The Ripple Effect of Banking Failures: Who’s Next on the List?
Following the collapse of Silvergate Bank, Silicon Valley Bank (SVB), and Signature Bank, and the subsequent spike in Credit Suisse default insurance cost, concerns are growing that the crisis may impact other financial institutions, some of which are at greater risk than others.
According to an article by Scott Hamilton, global payments and liquidity expert and contributing editor at Finextra Research, published on March 13, Pacific Western Bancorp, First Republic Bank, and Western Alliance Bancorporation are among the other potential dominoes that could fall.
Hamilton explains that “several regional institutions were hammered over the weekend and in the early hours of US markets on Monday,” and the institutions with heavy concentrations in technology and venture capital experienced significant market turbulence.
For instance, Pacific Western Bancorp saw its stock price drop by more than 50% since March 10, to below $6 per share, compared to almost $29 per share on February 7 and nearly $27 on March 8, resulting in a loss of over 75% of its value for the $41 billion-asset corporation.
Similarly, First Republic Bank saw its stock price plummet to just $20, down from its purchase price of $147 only five weeks prior, and its shares were temporarily paused on March 13.
Western Alliance Bancorporation a $61 billion deposit holding company catering to entrepreneurs and organizations, is closely monitored due to its customer base similarities with SVB, FRC, and PACW. Its stock price has dropped by 84% since its March 8 close of just over $71 per share, and it, too, briefly halted trading on March 13.
Several major companies across different industries have disclosed their exposure to the now-collapsed SVB, including Circle ($3.3 billion), BlockFi ($227 million), Payoneer ($20 million), Roku ($487 million), and Roblox, with $150 million.