The global bank stocks across the world plunged on Monday, the aftermath of the collapse of the Silicon Valley Bank, despite US President Joe Biden's reassurance that America's financial system and people's deposits are safe.
While the share prices of Spain's Santander and Germany's Commerzbank slumped by more than 10% at one point, Japan's banking subindex led the fall in Asia, down 6.7% in early trade.
Some smaller US banks too suffered losses. The shares of First Republic Bank fell more than 60% after efforts to finance banks by providing them with additional funding failed to calm investors. The panic has resulted in major U.S. banks losing around $90 billion in stock market value on Monday, reported Reuters.
The situation has triggered speculations that America's Federal Reserve will now not hike interest rate, a major step towards curbing inflation.
In Asia, MSCI Asia Pacific Financials Index droppedas much as 2.7% while Mitsubishi UFJ Financial Group Inc. fell to 8.3% in Japan. South Korea’s Hana Financial Group Inc. fell 4.7% and Australia’s ANZ Group Holdings Ltd. lost 2.8%.
Shares of bank-related companies in India too settled lower on Monday evening. The stock of IndusInd Bank tumbled 7.46 per cent to close at Rs 1,060, AU Bank tanked 4.49 per cent to Rs 596.25, State Bank of India (SBI) declined 3.21 per cent to Rs 529.70 and Bandhan Bank slipped 3.09 per cent to Rs 217.85 apiece on BSE.
Besides, Federal Bank declined (2.71 per cent), Bank of Baroda (2.32 per cent), Axis Bank (2.29 per cent), ICICI Bank (1.82 per cent), Kotak Mahindra Bank (1.45 per cent) and HDFC Bank (1.26 per cent). Bankex index plummeted 1,027.62 points or 2.24 per cent to close at 44,793.66 on BSE.
Customers line up before SVB
The custmers Silicon Valley Bank customers lined up Monday morning to take their money out despite Biden's assurance that the money will be safe. This comes as SVB stated that customers will have access to all their deposits from Monday and regulators set up a new facility to give banks access to emergency funds.
In a letter to clients, SVB's new CEO Tim Mayopoulos said the bank was open and conducting business as usual within the United States and expected to resume cross-border transactions in the coming days.
"I recognize the past few days have been an extremely challenging time for our clients and our employees, and we are grateful for the support of the amazing community we serve," said Mayopoulos, a former CEO of federal mortgage finance firm Fannie Mae who was appointed by the FDIC to run SVB.
