After three banking giants, Silvergate Bank, Silicon Valley Bank (SVB), and Signature Bank, all collapsed within days of each other, and the Credit Suisse default insurance cost soared, fears are mounting that the crisis could affect other financial institutions, with some more at risk than others.
Specifically, other potential dominos that could follow include Pacific Western Bancorp, First Republic Bank (NYSE: FRC), and Western Alliance Bancorporation, according to the article by Scott Hamilton, the global payments and liquidity expert and contributing editor at Finextra Research, published on March 13.
Effects on other banks
As the finance expert explained, “several regional institutions were hammered over the weekend and in the early hours of US markets on Monday,” and the aforementioned institutions with heavy concentrations in technology and venture capital were the ones to experience significant market hangovers.
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Indeed, the stock price of Pacific Western Bancorp (NASDAQ: PACW) declined over 50% since its previous close on March 10, leaving it trading at below $6 a share, compared to nearly $29 per share on February 7 and closed at almost $27 on of March 8, which means the $41 billion-asset corporation had lost over 75% of its value.
Meanwhile, the price of First Republic Bank (FRC) stock slumped to a mere $20, from the $147 purchase price it had just five weeks before, on top of which the trading of its shares was temporarily paused on March 13, despite the company’s management claiming this was “no SVB” in terms of its customer base, Hamilton noted.
As for Western Alliance Bancorporation (NYSE: WAL), a $61 billion-deposit holding company focusing on entrepreneurs and organizations, it is under close scrutiny due to its customer base sharing similarities with SVB, FRC, and PACW, and has lost 84% to its March 8 close price just above $71 per share, as it, too, briefly halted trading on March 13.
Meanwhile, major companies across different industries have disclosed exposure to the now-collapsed SVB, including stablecoin issuer Circle ($3.3 billion), cryptocurrency exchange BlockFi ($227 million), payments platform Payoneer ($20 million), streaming giant Roku ($487 million), and social gaming system Roblox (NYSE: RBLX), with $150 million.
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