It was a cold spring for the banking industry – and a cold and wet one for gardeners too. March was the cruellest month, breeding bankruptcies out of the dead ground, even in sunny California.
Silicon Valley Bank was not a household name over here, or indeed in most of the US, but its troubles had repercussions around the globe. An incontinent number of words have been processed in attempts to explain what went wrong. Although, curiously, NatWest has a small office in one of the bank’s buildings in San Francisco, that doesn’t give us any privileged insights.
The conventional reading is that the bank was awash with deposits, which it invested in US Treasuries in search of a higher yield than could be earned on deposits at the Fed. When rates rose sharply it found itself sitting on a large paper loss, and attempt to raise new capital to fill the hole failed. So the bank was done for as an independent entity. Its UK subsidiary was taken on by HSBC, for one whole pound.