© Reuters
Investing.com – At the end of the turbulent week ending Friday, the Federal Reserve announced that US banks borrowed $475 billion in one week, as the banking crisis continued.
At the same time, according to financial reports, 500 billion dollars were withdrawn from small banks within two weeks, that is, since the spark of the banking crisis with the collapse of the Silicon Valley bank.
All you need to know about bankruptcy and is your money in danger?
Major and minor banks..Where is the crisis?
According to the published data, we find that banks borrowing from small banks is equal to the level of lending from major banks, while the capital of major banks is equal to twice the capital of small and subsidiary banks in the United States of America.
To realize the extent of the panic and the crisis of banking confidence, it is enough to know that, according to JP Morgan (NYSE:) $ 1 trillion has been withdrawn from highly reliable US banks in the last two years, that is, since the Federal Reserve began raising interest rates, but the value of withdrawals in just 14 days That is, since the beginning of the Silicon Valley bank crisis on the tenth of March, it has exceeded $ 500 million, which is a record number in the average daily withdrawal.
The new Fed data for banks showed that banks lost $100 billion of their deposits last week, as $120 billion was withdrawn from small and subsidiary banks, and $45 billion was withdrawn from foreign bank branches located in the United States of America, while $67 billion was deposited in banks. The vaults of the major American banks. It is worth noting that the Silicon Valley Bank, which was subjected to a collapse calculated among the major banks, and despite the huge volume of withdrawals that the troubled bank is exposed to, this did not stand in the way of the positive deposit data of the major banks, which indicates the degree of great pressure that is being exerted. On the smaller banks and the huge volume of transfers from them to the big ones in the market, such as Bank of America (NYSE:), Goldman Sachs (NYSE:), JPMorgan, and others.
Contagion of the banking crisis..to what extent has the epidemic spread?
But the money does not just go to big banks, because according to research published by JP (EGX:) Morgan, half of this money goes to official government bonds while the other half goes to the largest and most solvent banks.
According to the Wall Street Journal, 200 banks are facing problems similar to what the Silicon Valley Bank was exposed to, and the American crisis is no longer narrow in scope, as Credit Suisse suffered a complete collapse, and the largest Swiss bank, UBS, bought it to contain the crisis, which hurt UBS shares, as well as bets on faltering. The largest Swiss bank.
Deutsche Bank also suffered a major shock in trading on Friday, as the stock fell by more than 10%, while credit default swaps (CDS) rose to the highest point in 4 years.
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Another bank in the “red” spotlight
Charles Schwab Bank (NYSE:) also entered the circle of extreme danger after the bank’s credit default swaps rose to 124,245 points, up from the 80-point levels, which represents a serious threat to the American bank. Charles shares recorded $53.26, up 0.70% by the end of Friday’s trading. However, it is worth noting that the bank fell from levels of $76 on March 9 to $53.26 on Friday, March 24, representing losses of nearly 30% in two weeks, and losses are expected to rise with the return of trading on Monday.
The biggest scene
This coincided with the decisions of the central banks, led by the US Federal Reserve, which announced an increase in interest rates by 25 basis points, to reach 5.00%, while the European Central Bank raised interest rates by 50 basis points, the Bank of England by 25 basis points, and the Swiss Bank by 50 basis points. Yellen said that the United States is considering providing protection for all bank deposits at the beginning of last week, which stimulated a rise in the stock market and bank shares, but Yellen returned in her testimony before Congress to say that the decision is not close to happening and that it is unlikely that uninsured deposits will be protected. , which pushed bank stocks to a violent decline, which can be seen in hitting the KRE ETF for bank stocks to a new record low.
