Assets of US banks are worth massive $2TRILLION less than their accounts report and 200 banks could be at risk if customers rush to withdraw, leading academics warn

Assets held by America’s banks are worth a staggering $2 trillion less than stated in their accounts because of ‘unrealized losses’ like those which triggered the collapse of Silicon Valley Bank, a study suggests.

And a run on the banks would leave customers at nearly 200 institutions facing losses of up to $300 billion, according to the paper by leading finance academics.

The paper said the value of assets across the U.S. banking system is ‘$2 trillion lower than suggested by their book value’. Those assets include Treasury bonds whose value has decreased significantly across the past 12 months because of an aggressive campaign of interest hikes by the Federal Reserve.

SVB’s collapse was partly because executives used its burgeoning customer deposits to buy these bonds, then lost money as it rushed to sell them at a loss amid a run on the bank.

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