Prof. Dr. Narumon pointed out that Silicon Valley banks in the United States collapsed because they did not diversify risks. Too much money to buy government bonds when interest rises bond prices fall When customers flock to withdraw money, they have to sell bonds at a loss. Even if it doesn’t have a wide impact But every organization in Thailand should study it as a lesson.
Today (11 March) Prof. Dr. Naruemon Pinyosinwat Treasurer of Palang Pracharat Party Post a message on Facebook. Silicon Valley Bank in the United States closes its operations on Wednesday, March 8, Silicon Valley Bank announced a loss of $ 2 billion from the sale of joint bonds. The next day, Silicon Valley’s stock price plummeted more than 60% until Friday, March 10, when it was shut down. The losses were the largest ever to commercial banks since the 2008 global financial crisis, following the closure of $209 billion in assets. and a total deposit of 175 billion US dollars. It came under the control of the Deposit Insurance Company, or FDIC, which put it in the newly formed National Bank of Santa Clara.
The reason why Silicon Valley banks have to sell bonds at such a loss is because
1. When startups get high attention There is a large amount of deposits coming in. The bank invests most of its deposits in US government bonds. Not good risk diversification
2. The past two years The Fed uses policy to raise interest rates to fight inflation. As a result, the value of government bonds held by banks continued to fall.
3. Economic Impact of the COVID-19 Pandemic This has caused deposit customers to gradually withdraw their money from the bank.
4. Banks must sell bonds at a loss in order to bring money to customers who want to withdraw money.
5. When announcing a loss from selling bonds of up to 2 billion USD The more customers flock to withdraw money until the bank lacks liquidity. and was inevitably closed during the day
Although the damage to Silicon Valley banks is unique, as described. and analysts believe that The damage is unlikely to be so wide that it leads to a new financial crisis. but every organization, even in Thailand Should turn to check the assets in hand that are held together to see if they are concentrated in any type of asset too much or not? Even government bonds that were originally believed to be low-risk assets but this event It shows that the uncontrollable factor is rising interest rates causing bond values to plummet. When there is a need to sell to repay debt It can cause losses to the point of lack of liquidity and eventually bankruptcy.
