Silicon Valley Bank’s collapse is not a 2008 moment – UBS

The collapse of Silicon Valley Bank has created turmoil in the US banking system, prompting comparisons with the global financial crisis. Economists at UBS do not see the current bank failures and government action as a precursor to a systemic crisis

US banking system is better capitalized than prior to the 2008 global financial crisis

“While we are monitoring unfolding events, we do not see the current bank failures and government action as a precursor to a systemic crisis.”

“The US banking system is better capitalized than prior to the 2008 global financial crisis: The industry’s Tier 1 risk-based capital ratio stood at 10.11% at the end of 2007 compared with 13.65% at the end of 2022.” 

“Silicon Valley Bank was in some ways unique. It had a high exposure to VC startups experiencing cash burn, leaving it vulnerable to deposit outflows. It had the highest ratio of securities to total assets in the industry and so was virtually the only US bank that had close to negative equity if mark-to-market losses were included.”

“Where US regulators let Lehman Brothers fail in 2008, they have stepped in proactively this time to make depositors whole.”