Misfortune or systemic imbalance?  

Lessons and consequences of recent bank failures for banking supervision in the euro area

Bank run in the U.S.

When the San Diego-based Silvergate Bank with only USD 11 billion in assets closed its (virtual) doors on March 8, 2023, it was the beginning of a quake that – to this day – has shaken not only the U.S. but also the European banking sector. More bank crashes followed.

Only two days later, the next in line was a financial institution whose name has since become synonymous with the latest banking crisis: the disproportionately larger Silicon Valley Bank (SVB) with more than USD 200 billion in total assets. This not only led to further bank closures in the U.S. (Signature Bank on March 12, 2023); on an international scale, overall stock prices of banks and especially of certain  institutions plummeted. 

Consequences for European banks 

In Europe, the crisis hit the second largest Swiss bank, Credit Suisse, which used to be a flagship of the entire sector. On March 19, 2023, just days after the first closures in the U.S., the forced merger with competitor UBS was announced due to political and regulatory pressure. 

Huge question marks

Since then, some issues have been hotly debated: Why did the almost forgotten phenomenon of a “bank run”, which many believed to be a thing of the past, occur in the first place and what is new compared to previous cases? Why did it hit U.S. institutions in particular? What are the consequences for bank regulation and supervision, which have been massively expanded since the financial crisis of 2007/08 with the intention of preventing new banking crises?  

Our analysis

We have addressed these questions and more in a new and broad-based analysis. You can find a summary of the key findings as a PDF below.

We would be happy to discuss the topic in more detail in a personal meeting. Feel free to contact us at any time.