Fears of another Silicon Valley Bank (SVB) style collapse were reignited, hammering global markets. The trigger was news from two US regional lenders, Zions Bancorporation and Western Alliance, which revealed they were exposed to millions in bad loans and alleged fraud.
This development, while involving smaller banks than SVB, raised broader questions about credit quality in the high-rate environment. Analysts fear a “domino effect,” pointing to other recent credit-related bankruptcies as evidence of growing stress.
The market reaction was severe. Bank stocks plunged globally, wiping €37.4 billion off European lenders alone. Barclays, Deutsche Bank, and Banco Sabadell were among the biggest fallers. Stock indices in London, Frankfurt, Tokyo, and Hong Kong all dropped.
Investors, facing a building “wall of worry,” fled to safe havens. Gold prices soared to a new all-time high of $4,378 an ounce. The VIX “fear index” jumped over 22%, signaling a sharp increase in market volatility.