European and American bank stocks “collapse” because of SVB, but domestic capital still adds thousands of billions

Global banking stocks “crushed” because of SVB

This week, the event that shook the financial markets in particular and the global economy in general was the forced closure of Silicon Valley Bank (SVB), becoming the largest bank bankruptcy since the 2008 financial crisis.

Specifically, the state regulator appointed the Federal Deposit Insurance Corporation (FDIC) to handle SVB's assets in a period that spread to other banks in the US and Europe and raised concerns about potential risks.

While SVB shares were halted Friday, shares of other midsize U.S. banks added to their recent heavy losses. The S&P 500 regional bank index (.SPLRCBNKS) fell 4.3%, bringing its weekly loss to 18%, its worst week since 2009.

European and American bank stocks are still rising because domestic SVB stocks are still rising by billions of dollars, image 1 — Silicon Valley Bank (SVB) makes European and American bank stocks fluctuate. Illustration photo

US banks lost more than $100 billion in stock market value in two days, while European banks lost another $50 billion, according to Reuters calculations.

The SVB crisis comes as the US Federal Reserve, locked in a battle against inflation, is raising interest rates and ending the era of cheap money. Investor concerns about a sharp rate hike at the Fed’s next meeting later this month were eased on Friday by signs of slowing wage growth in the February jobs report.

The S&P 500 bank index (.SPXBK), which includes all banks in the benchmark index, fell 0.5%, bringing the index's weekly loss to about 11%, its biggest weekly decline since the global market meltdown in March 2020 following the onset of the financial crisis caused by the coronavirus pandemic.

“There are obvious cracks in the system and the concern is if the Fed raises rates (more than expected) in two weeks, will that break something in the banking system? That’s why banks are selling and the market is nervous,” said Jake Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma.

Signature Bank (SBNY.O) fell about 23%, while San Francisco-based First Republic Bank (FRC.N) fell 15%.

Among other regional banks hit hard, shares of Western Alliance Bancorp (WAL.N) fell 21% and PacWest Bancorp (PACW.O) fell 38% after their shares were halted multiple times due to volatility. Charles Schwab fell more than 11%.

Bank of America (BAC.N) fell 0.9%. JPMorgan & Chase (JPM.N), the most valuable U.S. bank, rose 2.5%, but lost about 7% for the week.

Domestic bank stocks still add trillions

In the context of European and American bank stocks becoming extremely gloomy, domestic bank stocks still have good progress and have added thousands of billions of VND in market capitalization after a week of trading.

Closing this week, VCB shares of the "big brother" Vietcombank stopped at VND92,100/share after increasing by VND1,200/share, equivalent to 1.32%. Thanks to that, Vietcombank's market capitalization increased by VND5,679 billion to VND436,338 billion. VCB still holds the position of the stock with the largest market capitalization on the Vietnamese stock exchange.

European and American bank stocks are still rising because domestic SVB stocks are still adding billions of dollars, image 2 — Domestic bank stocks, led by VPBank , continued to increase in price, helping banks gain trillions of dong in market capitalization. Illustrative photo

After 1 week of trading, BIDV's BID shares increased by 1,250 VND/share, equivalent to 2.72% to 47,150 VND/share. BID helped BIDV's market capitalization increase by 6,323 billion VND.

One of the three other Big 4 stocks listed on the stock market, CTG of VietinBank, also had positive growth. CTG increased by VND1,400/share, equivalent to 5.04% to VND29,200/share. VietinBank's market capitalization increased by VND6,728 billion.

The group of joint stock commercial banks even had a stronger growth rate. At the end of the week, VPB of VPBank increased by VND1,300/share, equivalent to 7.65% to VND18,300/share. Thanks to that, VPBank's market capitalization increased by VND8,727 billion.

VBP shares were supported by very positive news next week, that VPBank may sign an agreement to sell more than 1 billion shares, equivalent to 15% of shares, to Japan's Sumitomo Mitsui Financial Group at the end of March. The deal is estimated to be worth about $1.4 billion, according to Bloomberg sources.

In an interview with Bloomberg in January, Jun Ohta, CEO of Sumitomo Mitsui, said the company had discussed a partnership with VPBank.

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