Silicon Valley Banks Facing Interest Rate Risk

03/11/2023 14:56 • Blockchain Briefs • 84 views

On March 11, the bank team of Guoxin Securities Economics Research Institute believed that the problem of Silicon Valley banks this time was that they absorbed a large amount of low-cost deposits during the period of loose liquidity and allocated long-term bond assets, resulting in a significant increase in potential interest rate risk, and the Fed’s interest rate increase exposed the problem. We believe that the problem rate of banks in Silicon Valley will not evolve into a broader crisis, mainly because the company’s problems are relatively independent and there is almost no cross-risk with other financial institutions. For Chinese banks, there is no direct impact.

Guoxin Securities: The probability of the bank event in Silicon Valley will not evolve into a broader crisis event

Analysis based on this information:

The banking team of Guoxin Securities Economics Research Institute has shared their interpretation of the current situation in Silicon Valley banks. They believe that the problem these banks are facing now is due to the absorption of a large amount of low-cost deposits during the period of loose liquidity. These deposits were then allocated to long-term bond assets, which resulted in a significant increase in potential interest rate risk.

The rate hike by the Federal Reserve has exposed this problem, and it is expected that the banks in Silicon Valley will face challenges. However, the team at Guoxin Securities Economics Research Institute has noted that the problem rate of these banks will not evolve into a broader crisis. This is because the company’s problems are relatively independent, and there is almost no cross-risk with other financial institutions.

It is essential to note that there will be no direct impact on Chinese banks as a result of this situation. This means that Chinese banks will not be affected and will continue to operate as they have been.

In conclusion, the banking team at Guoxin Securities Economics Research Institute has noted that Silicon Valley banks are currently facing interest rate risk due to the absorption of low-cost deposits allocated to long-term bond assets. While this is expected to cause some difficulties for the banks concerned, it is not expected to develop into a broader crisis. Furthermore, the situation is not expected to have any direct impact on Chinese banks. Overall, it is essential for the banks in Silicon Valley to be mindful of their interest rate risk and take appropriate steps to manage it.

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Silicon Valley Banks Facing Interest Rate Risk

Guoxin Securities: The probability of the bank event in Silicon Valley will not evolve into a broader crisis event

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