ASX 200 bank shares punished again on US bank fallout

Investors in ASX 200 bank shares are jittery in the wake of SVB's financial implosion last week.

Key points
  • ASX 200 bank shares are all down more than 5% since last Thursday’s closing bell
  • Investors are selling off bank stocks across the world following the collapse of US based Silicon Valley Bank
  • The US government is guaranteeing all of SVB’s depositors will get their money back, but there is no such guarantee for shareholders

S&P/ASX 200 Index (ASX: XJO) bank shares are taking another beating today.

Here's how the big four bank stocks are tracking in midday trading on Tuesday:

Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares are down 2.2%.

National Australia Bank Ltd (ASX: NAB) shares are down 2.4%.

The Westpac Banking Corp (ASX: WBC) share price is down 1.8%.

And Commonwealth Bank of Australia (ASX: CBA) shares are down 1.6%.

Today's losses now see all of the big four ASX 200 bank shares down more than 5% since last Thursday's close.

A man sits uncomfortably at his laptop computer in an outdoor location at a table with trees in the background as he clutches the back of his neck with a wincing look on his face.

Image source: Getty Images

Why are ASX 200 bank shares falling again today?

The reason, as you're likely aware, is investor angst over financial shares following last week's collapse of United States-based SVB Financial Group (NASDAQ: SIVB), or Silicon Valley Bank if you prefer.

I won't rehash all of the details here.

In short, it came down to a good old-fashioned (or bad old-fashioned) run on what was the 18th largest bank in the US. SVB was heavily dependent on its business with tech companies. And fast-rising interest rates over the past year have seen many of those indebted companies scrambling for cash.

As ever more customers began to withdraw money from SVB, and word got out that the bank was suffering a liquidity crisis, the whole business snowballed towards insolvency.

That's resulted in heavy losses over the past three trading days, not just for ASX 200 bank shares, but for banks the world over.

Regional banks in the US have taken a particular bruising. Yesterday (overnight Aussie time) saw shares in First Republic Bank (NYSE: FRC) crater by 62%.

While the US government is guaranteeing that all of SVB's depositors will see their money back, there are no such guarantees for shareholders.

"The thought process is that the government agencies are willing to protect the depositors, but that seems to be it," said RJ Grant, trading manager at KBW (quoted by Bloomberg). "Based on their actions, it signals that they don't care about the equity of these banks."

SVB Financial provides credit and banking services to The Motley Fool. Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended SVB Financial. The Motley Fool Australia has recommended SVB Financial and Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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