Recently, the media, both national and international, have been filled with news regarding the bankruptcy of Bank Silicon Valley (SVB). This bank was previously the 16th largest bank in the United States. SVB’s failure became the largest bank bankruptcy event since the 2008 monetary crisis. And because of that, SVB’s bankruptcy came as a surprise to many parties, especially banking customers and financial market players in the US.
The impact of SVB’s bankruptcy led to a decline in bank shares, not only in the US, but also in Europe and Asia. This incident made investors worry that the same thing would happen to other banking institutions. Because apparently there are many banks that are even riskier than SVB.
What is clear, the SVB bankruptcy event is a major event in the financial world. And affect the level of customer and investor confidence in banking institutions, not only in the US, but also in other parts of the world.
However, apart from SVB, it turns out that there are several other large US banks that have experienced bankruptcy before, some even bigger than SVB. And the following are the 5 biggest bankruptcies in the US, quoting from dataindonesia.id.
1. Mutual Washington
Prior to the SVB bankruptcy, Washington Mutual’s bankruptcy was the biggest bankruptcy event in US history. WaMu was the largest US commercial bank before, hence its bankruptcy was quite a shock.
WaMu filed for bankruptcy on September 25, 2008, when the global financial crisis hit. The trigger was the massive withdrawals made by bank customers, causing WaMu to experience difficulties with its customer funds. This was touted as a domino effect of the bankruptcy of Lehman Brothers which was the cause of the global financial crisis at that time.
WaMu’s bankruptcy is the largest bank bankruptcy in US history. At the time of filing for bankruptcy, WaMu’s total assets were US$307 billion.
2. Silicon Valley Bank
As discussed above, Silicon Valley Bank (SVB) recently went bankrupt. Precisely on Friday March 10, 2023.
It was stated that SVB’s bankruptcy case was the largest since the global monetary crisis that occurred in 2008. However, overall, SVB only occupies the second position as the largest US bank bankruptcy case.
According to data from the Federal Deposit Insurance Corporation (FDIC), SVB had total assets worth US$209 billion at the time it was declared bankrupt.
3. Signature Bank
Signature bank is a crypto-focused commercial bank. This bank went bankrupt adjacent to the SVB bankruptcy case. If SVB goes bankrupt on March 10, then 2 days after the signature bank is declared bankrupt.
The signature bank bankruptcy case was indirectly caused by SVB’s bankruptcy. Meanwhile, the real reason why the signature bank was declared bankrupt (closed by the regulator) was due to the effects of the long crypto winter and the bankruptcy of the FTX crypto exchange. Thus causing signature banks to start reducing their crypto deposits slowly since 2022 ago.
The closing of signature banks is done to prevent systematic risks that can create bigger chaos, such as a financial crisis for example. Signature bank is one of the largest bank bankruptcy cases in the US with total assets of 110.4 billion USD.
4. Continental Illinois National Bank and Trust
The next biggest bankruptcy case occurred in 1984 which was experienced by the Continental Illinois National Bank and Trust. This is the case of the largest bankruptcies in the US for decades before it was finally broken by the bankruptcy case of Washington Mutual, which had 7 times the total assets.
Continental Illinois National Bank and Trust bankruptcy was caused by a bank run action in 1984 which resulted in a foreclosure by the Federal Deposit Insurance Corporation (FDIC). Continental Illinois had total assets of US$40 billion at the time of bankruptcy, and was acquired by Bank of America in 1994.
5. First Republic Bank Corporation
The bankruptcy of the First Republic Bank Corporation occurred in 1988. This bank is an American bank based in Texas, which has developed well enough to become the largest bank in Texas.
The bankruptcy of First Republic Bank Corporation occurred during the savings and loan crisis. The savings and loan crisis is a crisis condition in which 32% of the S&L savings and loan institutions in the US fail.
The failure of First Republic Bank Corporation became one of the biggest bankruptcies in the US because this bank has total assets worth US$32.5 billion.
Those are the big banks that have gone bankrupt throughout US history. In addition, even though bankruptcy is not common, according to S&P Global throughout 2015 until now there have been 30 banks in the US that have gone bankrupt, including SVB and signature banks.
However, this number actually decreased when compared to the period from 2013 to 2014 where 40 US banks went bankrupt. And that number is still insignificant when compared to the 2008-2012 period, where there were 465 banks in the US that went bankrupt.
