No one said that investing was dull and this weekend certainly provided some excitement and stres for investors.
The Silicon Valley Bank depositors have been fully protected. That was what I expected since the main purpose of bank regulation is to protect depositors. Shareholders adn bond investors in the bank appear set to be wiped out. In large part that is because the receiver (The federal deposit insurance corporation) appears to be selling off assets at a fire sale price rather than holding those assets (which include government bonds) to collect full value at maturity.
There has been some contagion to other small banks but the FED is attempting to reassure markets.
Depositors and shareholders in small banks may have a tendency to abandon ship even with the FED assurances.
It’s not surprising that there has been some fallout due to the massive interest rate movements. Hopefully most of the losses are in the private shadow bank sector as opposed to publicly traded banks.
I believe Canadian Western Bank is very well managed and has not suffered any material losses due to the rise in interest rates. But they could still be vulnerable to some depositors seeking larger banks.