Small banks need sugar daddies

This weeks trend: Bank Consolidation

Credit Suisse has been sold off for a knockdown price this week. Swiss regulators changed the law so that shareholders didn’t get a vote, but it was looking like the options were either sell for a massive discount — or get nothing.

In the coming months, I think we’ll see this play out a number of times.

This Tweet is satire, but the point hits the nail on the head. Many small bank risk management executives will be quietly panicking right now. The bond duration problem that undid SVB and Signature Bank is impacting banks all over the world, and many of them will be looking for a sugar daddy to get them through this liquidity crisis.

An orderly sale now at a discount price is still likely to be a better result for shareholders than a potential failure or emergency sale in the future.