What is the immediate impact of the collapse of the Silicon Valley Bank?
A recent CNBC article stated ‘this is not another banking crisis, analysts say — it’s ‘sentiment contagion’ instead’.
However the key points in this article did give rise for concern for US businesses.
Key points:
- The collapse of U.S.-based Silicon Valley Bank, the biggest bank failure since the global financial crisis, sparked a sell-off in banking stocks as contagion fears spread.
- The S&P 500 Banks index climbed 3% on the following Monday, but remains down 22.5% over March, while in Europe, the Stoxx 600 Banks index closed 1.7% higher Monday but has shed more than 17% this month.
- Citi concluded that, in the absence of a clear explanation for Friday’s stock price moves, we are in an “irrational market.”
Confidence is falling in the financial stability of the US banking system.
So what does this really mean for US businesses?
To be honest we are not sure, thats the problem, no one really is clear on the state of the US banks. If the financial analysts were clear they would be expressing far more confidence than they are today. Lack of confidence breeds fear, fear breeds panic and so on it goes until we have another financial crisis to manage.
All of this is likely to mean that more and more US based businesses will be tightening their belts and managing their cashflow, unpaid invoices is likely to be the obvious result.
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Author – Late Payment Service 2023.
