Unease triggered by SVB left European banking stocks nursing their biggest weekly losses since September and US bank shares have slumped more than 12% this week, their biggest weekly drop since early 2020. Germany’s Commerzbank issued a rare statement playing down any threat from SVB.
SVB’s loss on the sale of its $21-billion available-for-sale securities, consisting mostly of US Treasuries, has sparked concerns about the bond portfolios of US banks. Banks are not required to immediately recognize paper losses on a bond, allowing some of these risks to slumber on their books. US benchmark 10-year yields surged by more than 200 basis points last year and almost 40 bps in February alone on renewed rate-hike bets.
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