‘Accident was waiting to happen somewhere’

MUMBAI: Uday Kotak, the chief of Kotak Mahindra Bank, and one of the world’s richest bankers, said that the crisis at Silicon Valley Bank (SVB) in the US was “an accident that was waiting to happen”. He said investors and analysts “underestimated the importance of financial stability” of a bank’s balance sheet. “When interest rates move up 500bps (100 basis points = 1 percentage point) from zero in a year, an accident was waiting to happen somewhere,” Kotak tweeted early on Friday.

The US treasury department is monitoring SVB Financial “very carefully” as shares in the firm plummet, White House economic adviser Bharat Ramamurti said on Friday. “I don't want to say more than that right now, but I want to assure the viewers that this is something we are on top of,” he told CNBC, while adding that this is a “highly fluid situation. ” “And your question is the right one—is this something that is going to spread into a more systemic issue,” he said.

In the US, Thursday was the worst day for the KBW Bank Index since June 2020, as its members shed over $80 billion of value. The top banks in Europe lost more than $40 billion in value on Friday.