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South African banks were left bleeding due to a global banking crisis, with billions shaved off their market value. But in the medium term, the crisis may have a silver lining for local clients and their banks.
The crisis was triggered by the collapse of Silicon Valley Bank, which ran into major trouble after its investment in long-dated US government bonds turned sour. Aggressive rate hikes have hit these bonds hard. Following the news that it was forced to sell these bonds at a big loss, clients started to withdraw their money – and soon the bank was forced to shut its doors.
Another regional US bank, Signature Bank, was also hit by a depositor run – followed by San Francisco-based First Republic Bank. The authorities have stepped in to prop up these banks with rescue packages.
