In Ernest Hemingway’s novel The Sun Also Rises you will find a dialogue between two characters which goes like this: “How did you go bankrupt?” Bill asked. “Two ways,” Mike said. “Gradually and then suddenly.”
Sadly there are parallels with businesses and we have also seen this with banks. The collapse of RBS when I was in charge of the Corporate Banks’ offices and people across the Midlands and East of England represented the biggest challenge of my career.
As we know the continuation of a successful bank relies on confidence, as the typical activity is the maturity transformation of short term deposits into longer term loans. So liquidity is key.
Whilst this is a simplification, what is common is the impact on customers and staff of bank failure. I worked with skilful and experienced bankers at RBS who went across to Silicon Valley Bank in London – I wish them the best, and thank goodness that HSBC stepped in.