The collapsing dominoes of crypto have reached the crypto banks with Silvergate and Silcon Valley Bank (SVB) closing last week. There are three common factors behind the 2 bank failures this week. Both banks failed to implement proven risk management practices present in the banking industry of managing concentration risk, interest rate risk, asset-liability mismatch and were woefully inadequately prepared for a bank run and reacted to the fast pace of rate increases and deposit withdrawls.
Tag: risk management
State of Banks in the US – OCC Annual Report
Office of Comptroller of currency (OCC) released the 2022 annual report providing state of the US banking system. In their report, the OCC concludes that the US banking industry remains well capitalized with ample liquidity and is well positioned to face the continuing geopolitical & economic uncertainty and market volatility which was also reflected in the views of the Bank CEO’s in the earnings calls last week.
Falling of the crypto banks
The dominoes continue to collapse in the crypto world with the turn of the crypto banks and lenders now. Over the summer, Crypto banks Celsius, Vauld and broker dealer Voyager have all suspended withdrawals and are in various stages of bankruptcy. These are the latest dominoes to fall in the crypto world as the price of bitcoin has dropped by 50% from last year and is down 69% from its all time high.
Grey Swans and Gray Rhinos in land of Risk Management
What are Grey Swans and Gray Rhino’s in the world of risk management? Gray Swans are used to describe events that are possible but not considered likely to happen and that have extremely significant impact. Gray Rhino, this is the Elephant/Gorilla in the room and is an event that is highly probable, has high impact but crucially is a neglected threat.
The Archegos FIASCO AT CSFB
An inside view on what was going on inside Credit Suisse that led the bank to have the biggest losses of $5.5 billion amongst major banks from the collapse of Archegos
Junk Bonds, Leveraged Loans and CLO’s
Junk Bonds Second quarter 2020 had a massive amount of debt issuance across High Yield (HY) and Investment Grade (IG) ratings and the month of