Discussing Banking Failure Fears and What Happened to Signature Bank & Credit Suisse
March 22, 2023
Welcome to Wealth Enhancement & Preservation’s Market Minute, where we get to update you on everything that happened in the financial markets this past week. My name is Armand Glassman, and I am a partner and a Certified Financial Planner™ at Wealth E&P and the Chief Portfolio Manager.
Last week, equity markets finished mostly higher, despite continuing investor concern about recent banking failures. On that note, I'd like to talk about two of the troubled banks involved right now in addition to Silicon Valley Bank.
- The first is Signature Bank: a regional bank that was headquartered in New York and was focused on wealthy clients and cryptocurrency. Though it had $110 billion in assets, it was really just a niche player. The bank was ultimately sold to New York Community Bank Corporation via its Flagstar Bank subsidiary.
- The second is Credit Suisse: a much more important global bank headquartered in Zurich, Switzerland. It has considerable influence, with over $1.4 trillion in assets under management. Credit Suisse is designated by the Financial Stability Board (FSB) as a globally systemic important bank, meaning that regulators believe that its failure could lead to ripples throughout the entire world financial system. As a result, the Swiss government, along with rival UBS, brokered a deal on March 19 to have UBS buy its smaller rival.
The net result of this is that both stocks of acquiring banks, New York Community Bank and UBS, are up as of today's trade. The values of assets that were transferred to the new banks are also up. These transactions and the government response seem to have quelled some of the fears in the banking industry. Hopefully, we'll return to business as usual and can put this fear-driven situation behind us.
If you have any other questions for us about this situation, your portfolio, or your personal financial situation, please feel free to reach out or visit www.wealthep.com. Otherwise, stay tuned for our Market Minute next week!
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