Recession 2024: Another bank is going to sink due to its mistakes! Know the whole story of coming from the floor to the floor
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Silicon Valley Bank Collapse: The economy of the entire world is going through a critical phase. America, one of the top superpowers, is once again facing a banking crisis. Last year also many banks had gone bankrupt. Signature Bank was also included in this. At that time New York Community Bank had purchased this bank. Only after about 11 months, New York Community Bank has also reached the verge of collapse. Rating agency Moody’s has made a big drop in its rating.
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The bank’s share price has fallen 26.36 percent in the last five days.
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Investors have suffered a loss of about 60 percent in one month.
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Currently the market cap of the bank is $302.55 crore.
The bank’s market cap has fallen by more than $7 billion since January 1, its lowest level since 1997. However, a saving grace for the bank is that 60 percent of its assets are covered under FDIC insurance. There is no possibility of huge loss due to this in any worst case scenario.
Why did the bank reach the verge of collapse?
New York Community Bank’s capital was affected after it purchased Signature Bank. Meanwhile, last week the bank announced that it suffered losses in the commercial real estate market. On the other hand, Moody’s says that New York Community Bank faces many challenges. It is becoming difficult for him to pay the loan. The biggest problem is liquidity. Along with this, one third of the bank’s deposits are outside the scope of insurance. If there is any disturbance or pressure among the depositors, the bank will have to face the pressure of funding and liquidity. However, the US government says that it is keeping an eye on the banking crisis. That regulators are working to reduce the risks of real estate loans.
Will the bank be closed?
Experts believe that there are no concrete signs of bank closure yet. The fall in share price is scary. As of last quarter, deposits had declined only 2% and excluding custodial deposits linked to the Signature Bank acquisition the decline was even smaller. But there could be a drastic change in this after last week’s earnings report. Bank of America analysts said in a note Friday that feedback they received from management indicates the bank is not seeing any abnormal deposit flows. However, NYCB has not given any official update on deposit flows. The bank is likely to file a required annual report within the next month, depending on the timing of prior filings. Giving information about this, America’s Treasury Secretary Janet Yellen said that we are in touch with the bank’s supervisors. We are carefully monitoring the ongoing banking stress. He said that he does not want to comment on any one bank.
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