Resilience of the System of Top US Banks

By ONTONIXQCM

The fall of SVB and Signature Bank are reflection of a much larger problem. In this short blog won’t go into the details of that or the actual dynamics of the failure.
Our goal is to show the current resilience of the System of top US banks as well as its evolution over the past few months. The banks that have been considered in our analysis are the top 12 indicated in the table below.

The evolution of resilience since November 2022 until mid-March 2023 is show below. It is clear how resilience fell rapidly from 70% to approximately 50% on March 14-th.

A look at the Complexity Map on March 14-th shows where the hubs (the large squares on the diagonal) of the system are, as well as the main interdependencies:

The ranking of banks, in terms of their respective impact on the resilience of the system is reflected in the Resilience Profile:

PNC and Goldman Sachs alone are responsible for almost 50% of the resilience of the system.
There is no guarantee that contagion of SVB and Signature bank will propagate to other banks or deeper into the economy, but the current resilience of the system is so low that it is highly likely.