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The unfolding situation in the US could be construed as having echoes of the Global Financial Crisis (GFC). This, combined with recent falls in Credit Suisse shares (which appear to be unrelated to the US mid — tier banks), have continued to put jitters into the banking sector. It is important to note, however, that despite the Silicon Valley Bank's (SVB) failure being the second largest in US history, when put into perspective, it's assets are less than one tenth of J.P.Morgan's, one of the major players in the US banking system.
Considering the rapidly developing situation, the US Federal Deposit Insurance Corporation (FDIC) has already taken control of SVB to navigate the collapse in the best interest of the financial system. Further announcements from the U.S. Treasury have sought to calm the broader market of the financial system's health and to reassure the market that the relevant tools are available, however stating there will be no GFC-style bailout, nor will one be necessary.
The US financial system is considered to be well capitalised overall. According to Mark Zandi, Moody's Chief Economist, the size of the smaller banks at risk is not likely to pose any threat to the financial system overall.
This current market volatility, while significant, does not alter our long-term views on how portfolios are positioned.
It is important to manage your portfolio in line with your long term objectives, aligned to your risk tolerance and to that end we would encourage you to discuss your portfolio with your financial adviser.
At Gallagher, we're here to discover your relationship between risk and reward, teach you about the importance of diversification, rebalance your portfolio when appropriate, and guide you through the ups and downs of the investment world.
So whether you've recently reached a financial goal and are wanting to take the 'next step', beginning a new stage in your life, or simply seeking help with a specific financial decision, we can help you build a personalised investment portfolio that is aligned with your needs and life goals.
Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general information purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient's industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers' control.
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