Despite promises from the US president that America’s financial system is secure in the wake of the failure of two US lenders, bank shares in Asia and Europe have plummeted. Authorities took action to safeguard customer deposits after the collapse of Silicon Valley Bank (SVB) and Signature Bank, both of which were based in the US.
Joe Biden pledged to take “whatever is necessary” to safeguard the financial system.
Investors worry that the repercussions may still affect other lenders.
Global stock prices fell sharply on Tuesday, with Japan’s TOPIX Banks index dropping more than 7% and on pace to have its worst day in more than three years.
In midday Asian trading, shares of Mitsubishi UFJ Financial Group, the nation’s biggest lender by assets, were down 8.1%.
The share prices of German Commerzbank and Spanish Santander both dropped by over 10% at one stage on Monday.
A string of smaller US banks suffered even worse losses than European counterparts. Despite reassuring customers that they had more than enough liquidity to protect themselves from shocks.
Mr. Biden stated that after the government intervened to fully safeguard deposits made with Silicon Valley Bank, individuals and businesses would be able to access all of their cash as of Monday.
After their funds were frozen, many company customers were faced with the possibility of being unable to pay their employees and suppliers.
Silicon Valley Bank Collapse – SVB which specialized in lending to technology companies. The bank shut down by US regulators who seized its assets on Friday. It was the biggest failure of a US bank since the financial crisis in 2008.