Q1 2023 / Strategy Update

The failures of Silicon Valley Bank and Signature Bank New York—as well as UBS’s takeover of Credit Suisse—dominated financial news headlines in the first quarter. In our March 21 letter to clients, we framed the risk of financial contagion as very low. Our analysis at the time pegged the US banking system as extremely well-capitalized, with Tier 1 capital ratios at very solid levels and loan-to-deposit ratios at almost their lowest levels in 50+ years.

We still hold these views.