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Tuesday, May 21, 2024

The collapse of the SVB. Comments Richard Quest, CNN journalist

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The collapse of the SVB bank in the USA caused a lot of confusion and reflected on the world markets. Michał Sznajder talked to CNN journalist Richard Quest, host of the “Quest Means Business” program, about the possible consequences of this situation for the American and global economy. – This bank has spoiled its risk management, led to a very bad situation, therefore it had to go bankrupt – said Quest.

Silicon Valley Bank (SVB) came under scrutiny by a federal agency on Friday after it was unable to withdraw funds to its customers. It was the 16th largest bank in the United States, and its failure was the largest since 2008.

The Fall of SVB – Commentary by CNN’s Richard Quest

“I think you have to think about what is likely to happen. Are we dealing with a systemic risk for the banking sector, or will it actually lead to a massive collapse. We know it’s not 2008, that’s been made clear. Global banks have a much better capitalization now than ever in the past, emphasized Quest.

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In his opinion, “the possibility that this crisis will spread … is much lower than what we have seen in the past.”

– This does not mean that it can not cause disturbances in the economic and financial markets, problems in the system at a time when the world of finance is under great tension, bearing in mind the prospect of recession, higher inflation or higher interest rates Quest pointed out.

He added that if interest rates rise, “banks will have more and more difficulties, especially those that have a lot of bonds in their portfolios.”

Read also: The collapse of the SVB bank. The European Commission issued a statement >>>

Asked if the US banking system is more stable and resilient than it was in 2008, the CNN journalist replied: “Absolutely yes, there is no doubt about it. The pace at which regulators took action to make this bank (SVB – ed.) and others on the east coast (USA) put into public hands shows that there is no risk here. Where there is controversy, it has to do with the fact that the Federal Reserve has made a clear decision that depositors will be reimbursed above the deposit guarantee limit. This means financial assistance for depositors.

Michał Sznajder talks to CNN journalist Richard Quest about the collapse of SVBTVN24 BiS, Reuters

According to Quest, “we have an element of moral risk here.” “This bank messed up its risk management, got it into a very bad situation, so it had to go bankrupt. And now there’s the argument that other banks may come to the conclusion that they can also make risky decisions because the Fed and the guarantee system will also help their depositors, he said.

“In the era of fragility we are in now, the concern is that the idea that a bank might be in trouble needs to be brought under control very quickly. You really can’t joke about it, you can’t do anything like that in the banking area, if we’re afraid people might go to the bank demanding their deposits then it has to go public and this time the authorities won’t make a mistake.

Read also: UK branch of SVB sold. The amount is surprising >>>

Main photo source: TVN24 BiS



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