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What Will Banks Do Next?

Investors are on the lookout for further indicators of danger as a result of the wider repercussions of the failure of Silicon Valley Bank. The following domino to fall? Since Silicon Valley Bank and Signature Bank failed last month, the S&P 500 has recovered by 6.5 percent, and there are positive indications that deposit withdrawals at local lenders are decreasing.Wall Street, however, does not believe that the banking crisis is even close to being ended. JPMorgan Chase CEO Jamie Dimon stated last week that "there will be repercussions from it for years to come," even after it is over. Additionally, quarterly reports issued this week by some of the largest lenders in the nation, including Citigroup, JPMorgan, and The impact of the unrest will be keenly scrutinized with regard to Wells Fargo. probable issues in the following three areas:economic expansion. According to Goldman Sachs, lenders with less than $250 billion in assets (think SVB) play a disproportionately large role in the economy, accounting for 80% of lending for commercial real estate and 45% of lending for consumers. Small and midsize banks are anticipated to dramatically reduce lending in an effort to rebuild their balance sheets following the crisis. According to David Mericle and Manuel Abecasis, analysts at Goldman Sachs, the downturn will likely cause the G.D.P. to decline by a quarter to a half percentage point.

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startup companies and venture capital businesses. The demise of Silicon Valley Bank, the preferred bank for technology start-ups, has increased pay attention to the health of new businesses. Liquidity problems existed even before the bank's bankruptcy. Approximately half of venture capital-backed companies are expected to run out of funds in the second half of 2023, according to Andrew Sheets, a strategist at Morgan Stanley. If lending stops, faltering start-ups, V.C. funds, and their limited partners may face much worse news. the stock exchange. Bank equities were excluded from the market rise in March.

Following the failure of SVB, the KBW bank index, which monitors the performance of 24 cant U.S. banks, is trading close to a 30month low. Bank profits are now anticipated to forecast slowdown in lending. "Given worries around bank liquidity, one may anticipate. in the upcoming quarter, more businesses in the nancial industry are expected to release E.P.S. guidance, In a

FactSet analyst John earnings per share. The Justice