Your Way Out Of The Banking Rubble

Does the Silicon Valley Bank (SVB) crash and the current banking crisis come as a surprise? Well, Bernie Sanders predicted back in 2018 in the next 5 years a big US bank will go bust given the current policies. The SVB downfall is the failure of an institution which had $200 billion in assets and was closed down by banking regulators on March 10, 2023. In terms of bank crashes, it ranks only second in US history. The long tail of financial loosening following the crisis of 2008, which was exacerbated by the COVID-19 epidemic, is thought to have led to the collapse. Customers pulled their money out of the lender due to the unexpected failure, triggering a typical bank run. Among depositors and investors, the aftermath of the SVB disaster has generated a great deal of worry and panic. Several significant banks like Signature bank, First Republic, and Credit Suisse as well as local banks and SVB's parent firms were also impacted by the collapse. The bank served numerous influential IT investors, and its demise had a big effect on the sector. In the wake of the catastrophe, bank stocks have remained in decline despite government involvement.

• The Epicenter of Crash (USA): The failure of SVB is anticipated to hurt the US economy. The stress on the banking system and the demise of SVB could modestly slow the US GDP growth by 0.2 to 0.3 percentage points. This could cause the economy to contract further and have an impact on small and midsize institutions. The failure of SVB may potentially gut a significant source of finance for digital firms, which might have cascading consequences on the market.
• Major Impact: Israel, UK, India, and Germany are the economies anticipated to be significantly impacted by Silicon Valley Bank's crash and subsequent banking crisis.?
• Minimal and indirect impact: Asia, especially China, Japan, and Southeast Asia, is unlikely to be severely impacted by the failure of Silicon Valley Bank (SVB). But, it has eliminated a crucial source of capital for new businesses in the area.?

What followed the SVB event?

The collapse of SVB had a ripple effect on the banking systems across the globe.

• Credit Suisse: Recently, Credit Suisse experienced a number of problems. With the collapses of Greensill Capital and Archegos Capital Management in 2021, which cost it billions of dollars, the bank has been under fire for the veracity of its financial reporting and its interactions with investors. Since the bank disclosed it had discovered "significant vulnerabilities" in its internal controls, Credit Suisse, which has also been struggling for decades, has seen its shares drop to a new record low. To protect the bank from the crisis, The largest bank merger of Systemically Important Financial Institutions (SIFIs) institutions since the financial crisis of 2007–08 occurred on Sunday when UBS Group and Credit Suisse Group agreed to join for approximately $3 billion. In order to assist with the acquisition, the Swiss National Bank gave UBS $100 billion in liquidity, and the Swiss government will contribute around $9 billion in losses insurance. A regulator-led bankruptcy and unwind that would have lasted longer and possibly put stress on the financial system was averted by UBS taking over Credit Suisse.
• Signature Bank: Another victim of the ongoing banking crisis in the United States is Signature Bank. On Sunday, the financial institution with headquarters in New York abruptly suspended operations; customers will be compensated. Authorities claimed that Signature Bank generated systemic risk and posed a risk to the nation's banking system. To put it another way, the government is taking action to safeguard the economy.
• First Republic Bank: Shares of First Republic dropped 62% on March 13th as a result of the shocking demise of former rival Silicon Valley Bank. Investors dumped First Republic and other linked banking companies like PacWest and Western Alliance because of concern that the American government's weekend efforts to thwart a potential banking crisis could not be sufficient. First Republic Bank, which is experiencing a lack of support from investors and clients, will get a $30 billion lifeline from many of America's biggest banks. It comes as a massive boost amidst the ongoing crises in the US.
• ECB (European Central Bank): The European Central Bank increased interest rates by 50 basis points as part of its commitment to ensuring that inflation promptly returns to the medium-term target of 2%. Notwithstanding the fact that the US and Switzerland were experiencing banking problems, the sovereign debt of countries in the Euro Area was under pressure.?

Aurigin - an alternate source of working capital

One simple knowhow is, if the problems are global, the solutions need to be global too. Aurigin is the world’s first deal origination platform to use a complex algorithmic approach to match middle-market corporates seeking capital with the most relevant providers of capital anywhere in the world. Why is this more relevant now than any time in the past? Aurigin via its deal origination platform reaches thousands of capital seekers and capital providers across the globe. We not only reach but also curate and match the right investors with the right seekers. This is what makes Aurigin different from any other M&A platform.?Over the past week, Aurigin has already reached out to its capital seeker base and is continuously onboarding more on a daily basis to offer a way out of this global crisis. We work closely with corporates to match them with relevant investors to offer an alternate source of working capital. Aurigin has been in close touch with all its clientele, both on the buy and sell sides to draw a closure of deals much faster than before, because we understand the current matrix of speed vs accuracy. Our major response from this outreach program is mainly from corporates of India, Israel, SE Asia where the deposits of these corporates are not insured by FDIC. We have already started connecting these immediate capital seekers to relevant investors depending on sector, geography and size of requirements.

While the global banking sector is facing the high hurdles of an ongoing cave in, Aurigin has already begun aiding those who are looking for a way out of the rubble.

By: Tasib Fazili, Aurigin Inc. (Wednesday, 22th March 2023)