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Big banks in the US post big increases in profit and revenue in 2023. Chase bank posted 52% increase in first quarter 2023 profit and record revenue. Chase attracted $50 billion in deposits from midsized banks. The problems at midsized banks, including collapse of SVB bank, have not affected the large banks. Depositors shifted deposits from midsized banks to larger banks. The Fed's sharp increase in interest rates to 4.75%-5.0% from about zero% in 2021 have increased bank margins as interest rates on deposits have not been increased as much. The glut in deposits means banks could keep depositor interest rates lower. The result is that America's banking system is in strong shape during a localized banking crisis affecting startups and Silicon Valley.

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In China's state banking system larger banks will get more state support than the smaller banks. Smaller banks such as Everbright Bank and Bank of Nanjing have 20% of loans made to local government financing vehicles, this compares with 6-7% for larger banks such as ICBC, Bank of China, China Construction Bank, and Agricultural Bank of China. Because of the poor asset quality and high risk of such loans the smaller banks are likely to be the first to face trouble in a financial crisis.

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Spain's banks have government debt holdings as a percentage of bank assets of 6.8% compared to 13.1% for Italy's banks. This is based on data available from the IMF. But Italian banks are far better capitalized than Spanish banks. Bank shares of Italy and Spain hit post Lehman lows in July 2011, but Italian bank shares are likely to recover faster than Spanish bank shares. Italian banks raised 8 billion euros of capital in 2011 and most banks have an average core Tier 1 ratio of over 8%. By contrast Spain's bank sector is perceived by markets as undercapitalized and the IPO's of savings banks Bankia and Banca Civica will be affected by the unsettled markets.

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Moody's Ratings company downgraded banks in the U.S. and Europe on June 21, 2012. Morgan Stanley, J.P. Morgan Chase, Goldman Sachs, Citigroup were downgraded two notches. Morgan Stanley managed to stave off a three notch downgrade. Credit Suisse was downgraded three notches. Bank of America was down one notch, and Wells Fargo which has only a small trading operation was not reviewed. This is the first time since 2007 that Moody's has conducted a sweeping downgrade of banks. About 100 banks were reviewed by Moody's. Banks being downgraded have large trading operations or investment banking business that is subject to higher risks. Greg Bauer, a managing director of global banking at Moody's said in his statement: All of the banks affected by today's actions have significant exposure to the volatility and risk of outsized losses inherent to capital-markets activities." For Moody's the main issue was that the capital bases of banks are maintained, considering that government support is less likely than before, according to Mr. Wassenberg, Moody's managing director for European banks. The impact on banks will be fewer opportunities for trading revenues for some banks, and will raise borrowing costs for banks. Moody's also cut the ratings of large European banks with significant trading operations. This includes Deutsche Bank, Barclays, HSBC, RBS, BNP Paribas, Credit Agricole, Societe Generale, UBS, and Royal Bank of Canada....

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The Economist points out serious problems at India's state owned banks. Following a $21 billion or 1.3 trillion rupee bailout from the government, and a new bankruptcy law to help banks deal with bad loans, the Indian banking sector was seen as recovering. Last week (Feb. 2018) showed new problems at three of the largest state owned banks. PNB, Punjab National Bank, is faced with fradulent transactions for 114 billion rupees, about a third of its market capitalisation. A jeweller, Mr Nirav Modi, had PNB employees issue letters of credit which were then used to borrow overseas, but the credit was not shown in PNB's books. The State Bank of India, SBI, is faced with losses after tackling bad loans. The Reserve Bank of India, India's central bank and bank regulator, has taken action to have banks recognize more bad loans to clean up the banking system.  The Bank of Baroda, the third largest state owned bank, is exiting South Africa after entering that market and lending to the controversial Gupta family that is seen as having undue influence on the government of ex- president Jacob Zuma of South Africa.  These events have battered the reputation of state owned banks in India. One private lender HDFC bank alone now has market capitalization worth more than the entire state owned banks in India. State banks are worth less than net assets in the market, showing a huge credibility gap. The bad loan situation that goes back to previous governments is affecting the growth rate in India's economy and creating new pressures on the government of prime minister Modi as it faces general elections in 2019. ...

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Accounting experts say the rebound in bank earnings in 2010-2011 is a good time to offset unrealized losses from troubled loans against higher earnings. These troubled assets make it hard to understand the true financial condition of banks, which becomes a major problem in financial crises. According to a WSJ analysis US banks had $13.8 billion in "unrealized losses" that have lasted at least a year in their portfolios as of Sept. 30, 2010. If these losses were taken now it would reduce bank's pretax income for the first 9 months of 2010 by 21%, according to the Journal analysis. Another problem focusses on Level 3 securities, which are illiquid investments that cannot easily be valued using market prices. The Journal analysis shows that as of Sept 30, 2011, the top ten banks had $360.7 billion in Level 3 securities. This is 42.6% of bank's shareholder's equity. At the top ten banks Level 3 securities fell by 24% in the last 2 years, which indicates an improvement. However some banks have made changes, whereas other large banks have not reduced the level of Level 3 securities. Take Bank of New York Mellon, for example, which took a $4.8 billion charge against earnings in 2009, largely related to mortgage backed securities. CEO Kelly said, it wanted to "put our investment securities issues behind us." Contrast that with Citigroup. Citgroup did not mention its high level of Level 3 securities when it anounced fourth quarter earnings. As of Sept 30, the bank held $79.1 billion of Level 3 securities- equal to 48% of its book value. This includes credit derivatives, asset backed securities and sub-prime mortgage securities....

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Instead of $20 billion proposed before Argentine elections when the country was facing economic pressures, banks will lend $5 billion in a short term facility, according to this report in WSJ November  20 2025 

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Bad loans in Spain's banking system reached a high of 8.16% of total loans by banks in Feb. 2012, according to the Bank of Spain. The total amount of bad loans was 144 billion euros.

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Banks claims on other banks in China increased for the financial sector from 25% in 2009 to 43% of total loans. The risk is that many of these claims are credit extended to China's shadow banking system which makes loans to property developers and other high risk borrowers. In this situation the non performing loan ratios released by the large Chinese banks and the core capital adequacy ratios are not a good measure for protection from risk in China's banking system and conceal hidden risks. Bank of China's nonperforming loan ratio fell to 0.94% in June from 1% at the end of 2011, and its core capital adequacy ratio moved from 10.08% to 10.15%. Orlik cites China bank analyst at Fitch, Charlene Chu, abut claims on banks having less regulatory risk weighting and thus concealing risk, which makes capital adequacy ratios inadequate to cope with the amount of real risk in the bank's loan portfolio. Just as happened in Spain after decades long boom and sense of safety in the banking system, problems were lying below the surface and the situation can change rapidly. ...

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About the collapse of two banks- Silicon Valley Bank and Signature Bank Fed vice chairman for financial and banking supervision, Michael Barr, had this to say at a Congressional hearing last week- "I think anytime you have a bank failure like this, bank management clearly failed, supervisors failed, and our regulatory system failed."  The rest of this report looks at changes the Fed can on its own make stricter supervision of banks over $100 billion, action the Biden administration is thinking of taking, and action by the FDIC. The Biden administration does not want to be seen supporting wealthy depositors at Silicon Valley Bank by guaranteeing uninsured deposits as it did. It took this action solely to protect the financial system so that it would not hurt working families. For this reason alone the Biden administration will seek tighter controls of mid sized banks now that the illusion that banks below $250 billion do not pose a risk to the financial system is gone. It will also seek to recover all funds used to support these failed banks from the banks and financial sector that has lobbied for so long for less regulation leading to failure of banks not once in 2009, but again in 2023. This time under the Biden administration the damage is carefully controlled so that it does not affect the American economy and working families. ...

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World War II with Tom Hanks review- good for new generation of young people who have not seen Saving Private Ryan or documentaries made in ,the 70's. There are too many talking heads and not like in the 70's when survivors could give live accounts of what they saw, as they are dead by now. There is good new video footage.  Yet the war is of epic proportions on so many fronts, 20 episodes barely touch the major events of WWII, not to mention the events in Asia and Japan, the events in North Africa and Italy. Each of these areas has separate books in the work of Rick Atkinson who worked on it for a decade. Atkinson is interviewed by Rubinstein on C-SPAN showing that there is new interest in what happened in World War II. For the Asian side of the story the story does not start in 1939, the Japanese invasion and occupation of China is shown from the days after 1914 through the story of Gen. Joe Stilwell who is the American who for half a century to 1945 was America's main representative in China, and Franklin Roosevelt's and America's commanding general in China in the fight against the Imperial Japanese Army. The empathy of Stilwell for the Chinese people and his willingness to risk his life to help is simply amazing- and is something to take away from this book by Barbara Tuchman. There is a lot that America can be proud of in creating a rising tide in Asia that has lifted all boats. ...

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In the first quarter of 2012 European banks financing from corporate bonds exceeded that of financing from bank corporate loans, according to data from Dealogic. European companes borrowed $179.5 billion by selling bonds in the first quarter 2012, a 38% increase over the prior year, according to Dealogic. In comparison bank borrowing declined 45% to $112.9 billion in the first quarter. New capital regulations under Basel III make it harder for banks to increase corporate loans. European regulators are requiring banks to improve the quality of their assets and enlarge their capital during the eurozone crisis.

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Basel 2 and 3 allow banks and regulators considerable latitude to calculate risk-weighted assets. Investors aren't certain that the reported capital ratios fully reflect the risks on bank's balance sheets. The Irish banks passed the European stress tests but had to be bailed out. Greek, Portuguese and some Spanish banks also find themselves shut out of private sector funding markets.

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Paul Krugman in NYT explains the failure of Silicon Valley Bank. He says the bank invested its money in safe Treasury bonds which fell in value with Fed's policy of sharp increase in interest rates to fight inflation. It presented itself as the bank for people in Silicon valley and succeeded more than it imagined possible leading to these investors putting their money at SVB bank. However Krugman points out SVB bank did not put this money from deposits into startups, it put these deposits in safe US Treasury assets. It is Venture Capital that put its money in the startups at Silicon Valley, then panicked and set in motion a bank run that led to $42 billion withdrawals on one day Thursday March 9. These SVB assets have value says Krugman. Over time the government says Krugman will get much of its money back from these Treasury assets of SVB.  Then why the government rescue by president Biden? A bank run of this type undermines confidence in other regional banks affecting the US banking system in a way that is totally unnecessary when the banking system as a whole is safe. In fact the Fed vice chairwoman Lael Brainard understood and made clear these risks says Krugman, and she now heads Biden's national Economic Council.   ...

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The efforts by Poland to maintain control over its banking sector. About 70% of the banking sector was owned by foreign owned banks before the recent withdrawal by banks from Western Europe. State regulators and the central bank would like to see more of the banking sector in Polish hands. Bank Zachodni WBK, wholly owned by Banco Santander of Spain will merge with Kredyt Bank, a subsidiary of KBC Group of Belgium, to create a larger bank with a stake of $104 million taken by the European Bank for Reconstruction and Development.

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In protecting deposits Biden and Yellen's goal is to keep the banking system safe so that it does not affect the economy and have effects on workers and families at the time of a cost of living crisis. The three years of the pandemic has also put families under severe stress. The Biden administration will also make it a policy to ensure that banks pay most or all of the costs borne by the FDIC in covering deposits that are uninsured. 97% of the deposits at Silicon Valley Bank were uninsured yet the Biden administration did not hesitate to have the FDIC cover these deposits because of its policy of recovering all costs after stabilization.

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The Greek government received 25 billion euros from the European Financial Stability Facility. This money will go to recapitalize Greece's banks. The four largest banks, Piraeus Bank, Alpha Bank, National Bank of Greece, and Eurobank EFG, will get the money by May 25, 2012. About 16% of loans made by Greece's banks in 2011 have soured, compared to 7.7% in 2009, according to the chief economist at Alpha Bank. There is a vicious cycle in effect with depositors withdrawing money and less money availble from bank financing for midsize business leading to businesses closing. The effect is little demand for loans and banking coming to a standstill. For the 8 months to March 2012, an estimated 23 billion euros have been withdrawn by depositors, of this 700 million euros in the period May 6- May 22, after the May 6 elections.

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Bank of England Governor warns that British banks are undercapitalized in Nov. 2012 and need to add to reserves for additional losses.

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As only 8 out of 90 banks fail in E.U. stress tests, there is considerable skepticism about the rigor of the stress tests in July 2011. All the banks are relatively smaller banks, with five in Spain, two in Greece and one in Austria. The failed banks have a total capital shortage of 2.5 billion euros. Analysts had expected over 20 banks to fail and requiring tens of billions of euros of capital injections. The 2010 tests had experienced the same criticism, with seven lenders failing and a capital deficit of 3.5 billion euros. European Banking Authority officials concede the lack of sufficient rigor in the tests and attribute this to conflicting political pressures from regulators and banks. EBA officials say their main usefulness is in the added transparency and information it brings. In the 2010 stress tests each bank had to show 149 pieces of data. In the 2011 tests this went up to 3200 points of data about exposures from government debt to derivatives. EBA Chairman Andrea Enria put it this way: "There is this perception that there are things hidden under the carpet, this will help the market to make up its own mind." About 1000 pages of documents were released by EBA to analysts, investment bankers, and investors after the tests....

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The move by the US Fed to cover the deposits at the Silicon Valley Bank to limit the fallout of the bank's collapse on the US banking system. By taking the step that the bank posed a systemic risk the government's deposit insurance fund will cover all deposits at the two banks rather than the standard $250,000. Any losses will be covered by a special assessment on banks and there will be no cost to taxpayers.

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Over the weekend June 25-26, 2011, the Basel Committee made the decision to raise bank capital reserve requirements from 7% to 9.5%. Wall Street Journal and analyst estimates show that Bank of America, Citigroup, and J.P. Morgan Chase will have to together raise $150 billon in additional capital. The rule gives the banks time till 2019 to reach the new goal. Banks that get even bigger could face an additional one percentage point increase to 10.5%. As of the end of the 1st quarter of 2011, J.P. Morgan had an estimated 7.3% ratio and would need $35 billion to meet the 9.5% capital reserve requirement. Bank of America would need $68 billion and Citigroup $48 billion to reach the 9.5% target.

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Economies have fallen back sharply but banks have not had to recognize bad loans as government support and repayment moratoriums have covered a quarter of all outstanding loans for companies and households. As a result there is a strange crisis in which defaults have not happened. Banks have not had to recognize bad loans. The question is what will happen once this government support and other support ends.

The European Central Bank says bad loans in eurozone could go as high as 1.4 trillion euros or $1.7 trillion, if the economies face further setbacks in the second wave of the coronavirus. European government support has been more generous than the U.S. In Italy over 25% of loans to businesses and 15% to households, totaling 300 billion euros were given payment holidays, according to Scope Ratings.

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The "negative Tier 1 capital" at Deutsche Bank's U.S. bank holding company Taunus Corp. of negative 7.58% cited by FDIC chairman Sheila Bair. Parent Deutsche Bank has total equity lower than U.S. banks Citicorp, Chase and Bank of America, with total equity equivalent to 4.4% of assets using a U.S. style approach says Eavis, making the Bair criticism relevant and timely in 2010.

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Shockingly Silicon Valley Banks spends half a million dollars on lobbying and this works to avoid government regulation. The bank with $209 billion in assets collapsed this week leaving depositors at risk. This report in The Guardian says this bank did not have a chief risk officer in the months leading to its collapse and more than 90% of its deposits were not insured. The lobbying worked and the bank avoided regulation. By 2015 the CEO hired a former Obama administration Treasury Department official for its board, and by 2019 the CEO was placed on the board of the Federal Reserve Bank of California. 

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Systemic risks from "too big to fail" and the pushback on capital reserve requirements that leave banks with lower reserves. Ewing describes the role of the president of the Swiss Central Bank, Mr Hildebrand, in setting rules for higher capital reserves for Swiss banks than that of other countries and the pushback from the banks resisting the new regulations. "He will never find another job in Switzerland," a Swiss newspaper Der Sonntag quoted one banker saying this about Mr. Hildebrand. Losses at Swiss bank UBS during the financial crisis and the $2 billion loss at a UBS trading desk in 2011 have created a new awareness of systemic risk at banks. During the financial crisis banks used an optimistic estimate of "risk weighted assets" which led to insufficient capital reserves in a crisis even as the banks were shown to be well capitalized. A sense that banks in Europe and the U.S. will continue to have insufficient capital reserves at 3-4% of assets under new rules and with the longer phase in times for the new Basel III regulations of reserves at 7% of assets to after 2016....