“Prof. Dr. Narumon” pointed out that the bank Silicon Valley in the US collapsed due to lack of diversification. Too much money to buy government bonds When interest rates rise, 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 business that Wednesday, March 8, Silicon Valley Bank announced a loss of $ 2 billion in bond sales. 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. After the shutdown, $209 billion in assets and $175 billion in deposits were put under custody. Deposit Insurance Corporation (FDIC) custody, 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 receive 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. The economic impact of the COVID-19 epidemic has caused deposit customers to gradually withdraw money from banks.
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 done to Silicon Valley banks is unique as described. And analysts are confident that the damage will not widen to lead 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.
