Banking tremors of 2023: what remains of the collapse of Silicon Valley Bank and Credit Suisse
Two bank failures in two weeks shook finance in 2023. A detailed reconstruction based on reports by supervisors and central banks.
In March 2023 the international banking system came under pressure within days. In the US, Silicon Valley Bank collapsed; in Switzerland, venerable Credit Suisse had to be taken over by UBS in a state-organised rescue. This reconstruction draws on official reports by the authorities involved.
Silicon Valley Bank: rate risk and a bank run
SVB had invested large deposits, many from tech start-ups, in long-dated bonds. As rates rose steeply, these lost significant value. When the bank announced losses on securities sales, customers withdrew deposits massively in a short time. On 10 March 2023 the bank was closed and the FDIC appointed receiver.
On 12 March 2023 the Treasury, the Federal Reserve and the FDIC announced that all deposits – including those above the $250,000 insurance limit – would be protected. The Fed also created a new lending facility for banks. In April 2023 the Fed published its own review, which also identified supervisory failings.
Credit Suisse: loss of trust after years of scandals
Credit Suisse had already been weakened by a series of losses and scandals, including the collapse of family office Archegos and the Greensill funds in 2021. Large outflows occurred in autumn 2022 and again in March 2023. The Swiss National Bank provided liquidity, but confidence did not return.
The weekend rescue
On 19 March 2023 the Federal Council, FINMA and the SNB announced the takeover of Credit Suisse by UBS for around CHF 3 billion. FINMA ordered a full write-down of Credit Suisse AT1 bonds worth about CHF 16 billion – a decision that sparked international debate and investor lawsuits. The government and the SNB provided extensive guarantees and liquidity.
The consequences
UBS completed the takeover in June 2023 and is now by far Switzerland's largest bank. In 2024 the Federal Council presented a report on banking stability proposing, among other things, stricter capital requirements for systemically important banks. In the US, rules for mid-sized banks came under intense review.
Lessons for companies
The crisis exposed an often neglected risk: concentrating liquidity at a single bank. Many SVB clients held all their operating cash there. Treasury departments have since spread deposits more widely and scrutinise counterparties more closely.
Assessment
Both cases showed how fast a bank run can unfold in the digital age, with different causes: rate risk dominated at SVB, a long-built loss of trust at Credit Suisse. The official reports below offer further detail.