Why higher interest rates are causing banks to collapse

<p><strong>Each week BusinessDesk and the NZ Herald’s Cooking the Books podcast tackles a different money problem. Today, it’s a banking expert on how safe savings are in New Zealand and Australia. Hosted by Frances Cook.</strong></p> <p>A bank collapse is the stuff of nightmares, with the potential to wipe out hard-earned savings, or a business’s ability to pay staff.<br>This nightmare has become reality in the US, with a run on Silicon Valley Bank, or SVB, that led to the bank collapsing. <br>It’s a big deal because SVB is, or was, the 16th largest bank in the USA. It’s the second biggest to fail since Washington Mutual’s collapse during the 2008 Global Financial Crisis.<br>For context, it’s a bigger bank than ANZ here in New Zealand, which is our biggest bank. SVB had assets of US$209b, while ANZ NZ has assets of US$120b (NZ$195.6b).<br>It’s been followed by a couple of other worrying developments. <br>Credit Suisse was Switzerland’s second largest bank – but it’s being bought out in an emergency rescue deal by the country’s first biggest bank, UBS. <br>UBS is snapping up their rival for a bargain 3 billion Swiss francs, which is about 60% less than Credit Suisse was supposedly worth before it hit panic buttons. <br>Meanwhile, back to the US, and Signature Bank has been shut down and is likely to have its deposits and loans bought out by Flagstar Bank. <br>Not great.<br>So could it happen here, and should we all New Zealanders be worried?</p> <p>If you have a question about this podcast, or a question you'd like answered in the next one, come and talk to me about it. I'm on <a href="https://www.facebook.com/FrancesCookNZ/">Facebook here</a>, <a href="https://www.instagram.com/francescooknz/">Instagram here</a>, and <a href="https://twitter.com/FrancesCook">Twitter here</a>.<br><br></p><p>See <a href="https://omnystudio.com/listener">omnystudio.com/listener</a> for privacy information.</p>