Prize quiz: Multiple banks in the United States have collapsed! Is the banking crisis far from over? Which bank might be the next to fail?

Over the past two months, the crisis in the US banking industry has continued to ferment, with several large-scale US banks collapsing, causing a great stir in the market. Following the collapse in March$SVB Financial (SIVBQ.US)$、$Signature Bank (SBNY.US)$1st of May, the Federal Deposit Insurance Corporation announced that the United States$First Republic Bank (FRCB.US)$will be sold to JP Morgan Chase Bank.

Will the US banking industry crisis continue to spread?

According to reports, the closures of Silicon Valley Bank, Signature Bank, and First Republic Bank involved assets exceeding 100 billion US dollars. The combined assets of the three US banks at the time of closure reached 548.5 billion US dollars, surpassing the total assets of the 25 banks closed in 2008.

As the crisis in the US banking industry intensifies, market panic worsens. Many industry insiders point out that the current market situation is "not good", and the crisis may once again spread.

Bill Ackman, founder of Pershing Square Capital Management, bluntly stated: "The banking industry is a confidence game. At this rate, no regional bank can survive bad news or bad data. With stock prices inevitably plummeting, deposits being continuously withdrawn, the next fragile bank also begins to teeter."

In the annual letter to shareholders, JP Morgan Chase CEO Jamie Dimon stated that the banking industry crisis triggered by the collapse of Silicon Valley Bank has not yet ended, and its impact will continue for several years. Although the USA banking system is strong and sound, the recent turbulence surrounding the financial system is the 'straw that broke the camel's back' towards economic recession. While a banking crisis does not necessarily lead to an economic downturn, it undoubtedly increases the risk of a crisis occurring.

Will regional bank stocks face another wave of collapses?

Under the influence of the news from First Republic Bank, investor panic has escalated. Recently, several American regional bank stocks have been heavily sold off, with some individual stocks experiencing circuit breakers. On May 4th,$PacWest Bancorp (PACW.US)$a decline of 50.62%,$Western Alliance Bancorp (WAL.US)$a decline of 38.55%,$First Horizon National (FHN.US)$a decline of 33.55%. The KBW Regional Banking Industry Index has fallen by more than 10% over the past four trading days since May 1st.

The Federal Reserve and major Wall Street banks have taken action to support the market. The U.S. Treasury Department reiterated the stability of deposits and sufficient liquidity, with reports suggesting that authorities are evaluating whether regional bank stocks are being manipulated. As a result, regional bank stocks saw a respite on the 5th, with a significant rebound in stock prices. In the volatile market environment, the focus is on the performance of American regional bank stocks, with speculations on the next bank that might collapse.

This article is based on$Banks - Regional (LIST2456.US)$Concept stocks, listing the top 12 banks with the highest 60-day decline (excluding banks that have already gone bankrupt), could the next potential bankruptcy be hidden behind Bank of America?

Mooers discussing hot topics.

How to view the recent rekindling of the banking industry crisis?

@Enate："Investor and depositor trust crisis in the entire regional banking system"

After FRC can't hold on, PACW is on the brink again, how can other small and medium banks stand alone? Obviously, nowThe focus is no longer on the quality of the bank's asset composition, but on the credibility crisis of the entire regional banking system for investors and depositors, while some industry insiders still believe that the U.S. banking industry is stable. It feels like some large banks may also be happy to see this situation, seizing the opportunity to merge and achieve low-cost expansion. The crisis is far from over, if things continue like this, regional banks will sooner or later face a major reshuffle.

@态度温和的以利亚_0372：

Western Alliance Bancorp Risks still exist and should not be taken lightly. Under the hawkish sentiment, let's see if J.P. Morgan Chase may also acquire this bank. The impact of this credit crisis is still unknown. The significant drop of these unstable regional banks may lead to a relative loss for depositors and investors who are willing to sit idly by, increasing the sense of risk.

@老才神："Regional Bank Stocks Temporarily Become Safe"

Because the FDIC requires large banks to replenish the deposit insurance fund, this has curbed the panic among market depositors. Fundamentally alleviating the issue of reduced deposits in U.S. regional banks. If no bank suspends trading at night and there is no significant drop at the opening, then this market trend may be approaching the end of the phase.

@Emma999：

Who is shorting bank stocks, the real culprit is Powell.

Almost all banks use deposits to hedge the purchase of US Treasury bonds for profit, but now the high-priced bonds they bought have fallen, resulting in losses and book losses for each bank.

Secondly, when the bank raises interest rates, the more money deposited, the more interest the bank has to pay on deposits, which means banks are currently facing losses every minute.

Thirdly, all asset prices are high, such as real estate! Let's not mention commercial real estate, let's talk about the most profitable residential properties, where taking out a mortgage can turn bad in no time! For example, in Hong Kong, the requirements for mortgages on residential properties are very high. For a house worth 8 million, with an initial payment of 800,000, but if property prices have already dropped to 6 million, the first choice for the buyer is to sell. Due to the interest rate hike, it's difficult to find a buyer to take over. Finally, the seller can only hand it back to the bank, but the bank only receives the 800,000 initial payment and 1 or 2 years of installments, leaving a price difference of 2 million between 800 and 600. The bank incurs losses again, leading to a one-sided market, ultimately causing the collapse of the bank.

Will the crisis in the US banking industry continue to spread? Do you think there will be more US banks closing down? Who might it be?

Participate in the discussion and share your wonderful insights in the comments section of this post. You have the chance to win:

Reference format:Which US bank do you think is most likely to collapse next? + Share your views

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Event time: until 24:00 on May 13, 2023

The above wonderful posts were selected based on content quality and interaction. In order to ensure smooth reading, some comments from the mooers have been slightly edited without altering the original opinions, and do not constitute any investment or financial advice. The mooers mentioned in the post will receive 188 points as a reward for their "Wonderful Comment".

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