As officials frantically try to contain the distress from America’s 16th-biggest lender, panicked investors are on the lookout for more bare flesh
tide to go out to discover who has been swimming naked—and on March 10th an especially large skinny-dipper was caught in the buff. Silicon Valley Bank (by regulators after a failed attempt to raise capital and a run on its deposits. As officials frantically try to contain the distress, panicked investors are on the lookout for more bare flesh.
Signs of broader distress in the American financial system were limited when markets closed on March 10th. Credit-default swaps on the debt of regional lenders are uncommon or illiquid; those of major institutions were subdued. Five-year swaps on debt issued by Morgan Stanley ticked up from 78 to 96 basis points last week, with higher values meaning a higher cost to insure against default.
A hit to the sector might mean a period of fretful and risk-averse behaviour from tech firms and investors. Roku, a streaming-hardware company, reported that it held $487m at the bank in a regulatory filing on March 10th. Nor are’s activities as geographically focused as its name suggests. The make-up of the company’s international depositor base has not been disclosed, but it has a presence in Britain, China, Germany and India, among other countries.
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