When markets are in ‘seek and destroy’ mode, like the last dragon in Game of Thrones, it’s fruitless to guess where they might attack next. Silicon Valley Bank’s excess of deposits was not in itself a signal of distress. Credit Suisse’s balance sheet was stronger than those of many other leading European banks. Deutsche Bank is a lot better-managed than Credit Suisse. But still investors swarm in search of weaklings.

And their next focus – alongside the impact on bond portfolios of fast-rising interest rates, as in SVB’s case – will be the most traditional of all causes of banking crises: commercial property. America has $20 trillion worth of it. The Green Street Commercial Property Price Index, a leading indicator, is down 15 per cent in a year across the sector, with the biggest falls in urban office values, where space stands empty as working from home takes permanent hold. Institutional investors are shunning real estate for higher yields at lower risk on government bonds. And that leaves lending banks, especially US regionals but also some foreign ones, allegedly including Deutsche, dangerously exposed.

Who knows what the market dragon’s breath may scorch next. But I predict the next banking calamity will be all about old-fashioned office blocks.

Sheikh out

The resignation of Ammar Al Khudairy, chairman of Saudi National Bank, following a $1 billion loss on its stake in Credit Suisse is a parable of picking words carefully. SNB became the largest shareholder in the tottering Swiss bank in November by buying 9.9 per cent for $1.5 billion, but has kissed goodbye to most of that in the emergency takeover by UBS. It was Al Khudairy’s answer when asked by Bloomberg last month whether SNB might increase its holding – ‘Absolutely not, for many reasons outside the simplest reason, which is regulatory and statutory’ – that precipitated the terminal crash of CS’s share price. If only he’d said maybe, the history of Credit Suisse, and his own career, might have taken a different path.

The biggest winner

Goldman Sachs is in the spotlight for its dual role in the collapse of Silicon Valley Bank. It was Goldman that led the failed $2.25 billion equity-raising for SVB which coincided with a flight of more than $40 billion of deposits, preceding the closure of the bank by regulators. The urgent need to raise new equity had effectively been triggered by a loss of $1.8 billion on the sale by SVB of a $21 billion bond portfolio to, guess who, Goldman Sachs — which was expected to earn between $50 and $100 million from the transaction.

The fear that other US banks may be in similar trouble has sent withdrawn deposits – $286 billion in two weeks, according to the data provider EPFR quoted in the Financial Times – flooding into highly liquid ‘money market funds’, which invest in US government paper and other low-risk assets but offer relatively attractive yields. Who, I hear you ask, is the biggest winner in that switch? Yes, it’s Goldman Sachs, whose money fund has reportedly taken in an extra $52 billion since SVB’s crash. And if the bubble in money market funds should happen to burst, we can guess which investment bank will somehow position itself on the other side to mop up.

Golden harvest

Friends celebrating their golden wedding tell me they had trouble booking a honeymoon hotel on 1 April 1973 because of the launch that day of Value Added Tax. Hoteliers and many other businesses were traumatised by the complex new levy, invented by the French bureaucrat Maurice Lauré in 1954 and imported from Brussels at an initial rate of 10 per cent as a consequence of joining what was then the European Economic Community.

What’s clever about VAT is that consumers have largely ceased to notice it and have little idea which goods and services it applies to – about half of their household spending, in fact – even though, at today’s standard rate of 20 per cent, it will harvest £157 billion for HM Treasury in the tax year just ending, or £5,500 per household. What’s bad about it is the regular nightmare it imposes (now including mandatory digital reporting) on small traders coping with its ever-changing small print. Still, a cut in the VAT rate on hospitality and hotel rooms for the rest of this year would be a fine way to celebrate its 50th birthday.

Fallen bastions

Another golden date: on 26 March 1973, women were first elected to membership of the London Stock Exchange – ‘this fallen bastion of City misogyny’, the Times called it – following a merger with provincial exchanges which had admitted female members since the war. Among the pioneering intake was Elisabeth Rivers-Bulkeley, a Viennese-born ice-skating champion and Riviera partygoer as well as a partner in the firm of Capel-Cure, Garden & Co, who according to another report ‘struck fear into the hearts of every broker determined to keep Throgmorton Street an all-male province’.

It’s a salute to Elisabeth’s cohort that trading-floor careers are now open to all who have the requisite feistiness – let me not say ‘cojones’ – though I suspect male dominance lingers in other areas of finance, notably private equity, venture capital and fund management. In the last of those, US research has often shown women-led fund teams out-pacing male-led rivals. Yet the 30% Club,
which lobbies for more women in senior roles, highlights statistics revealing just 12 per cent of UK portfolio managers are female and that at current rates of progress it will take 192 years before parity is achieved. Long before then, the problem won’t be misogyny but whatever neologism has been coined for the contempt of robots towards the inferior skills of human beings./>