Banks Worldwide Lose Close To $500 Billion In Market Rout Post-SVB Crisis

Bank shares globally have lost almost $500 billion, marking the largest decline for the financial sector since the Covid-19 pandemic began.

The recent downfall of Silicon Valley Bank heavily impacted financial stocks this week causing a significant decrease in market value for banks in the US, Europe and Japan. Losses have reached $459 billion, marking the sharpest decline since March 2020.

March saw major losses for banks worldwide, with US's KBW Bank down 18 per cent, Europe's Stoxx 600 banks down 15per cent, and Japan's Topix banking sector down 9 per cent.

Although Wall Street banks, including JPMorgan Chase and Goldman Sachs, provided $30 billion to stabilise California's First Republic bank, their efforts to prevent panic and stabilise the overall financial system were not entirely effective. The bank's shares decreased by 25 per cent during Friday's afternoon trading.

Despite receiving a $54 billion emergency credit line from the Swiss central bank, Credit Suisse's shares dropped by 8 per cent, with its credit default swaps and bonds being traded at distressed levels in Zurich.

Volatility has hit even the stronger banks, as the yield on the two-year Treasury note falls at its fastest pace since 1987.

Goldman Sachs lost $200 million in its trading desk dealing in interest rate products due to market fluctuations. The bank made no comments on the matter.

Regulators discussed methods to ease concerns about the financial system, particularly stabilising Credit Suisse and its global subsidiaries, in a meeting on Friday evening.

The future of 167-year-old Swiss bank is under debate by its executives and board members, as the institution has faced consecutive crises.

The bank is exploring various options, such as splitting up the company, conducting a public offering of its Swiss division, and selling its wealth and asset management units.

These moves would likely result in a transfer of ownership to UBS, as the government and regulators prefer the bank to remain under Swiss control.