This is an extract from Proactive investors which sums up the...

This is an extract from Proactive investors which sums up the problem and why there may be contagion ie many banks hold long tail bonds which are now worth a lot less than they were than 12 - 18 months ago - as long as they son5 need to redeem then they will survive but if they have to sell them then a big loss occurs.

“Lots of banks hold large portfolios of bonds and rising interest rates make these less valuable – the SVB situation is a reminder that many institutions are sitting on large unrealised losses on their fixed-income holdings.”
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If SVB’s rock-and-a-hard-place position sounds familiar, it’s probably because barely a day earlier, a similar thing happened to Silvergate Bank, another California-based financial institution. Silverware Bank was forced into voluntary liquidation on Thursday after suffering around $886mln in realised losses on its bond portfolio, for it, too, was forced to sell the at a discount to satisfy withdrawal requests.

95% of SVB deposits are uninsured.

It is very obvious why depositors are nervous and wanting to withdraw their money ESPECIALLY AS THE ABOVE QUITE SUGGESTS LOTS OF BANKS ARE SITTING ON UNREALISED LOSS ON THEIR BONDS.

This apparent crisis is far from over - ie just the start of the first innings.