(ENG)
Banking crises often have a severe impact on economic production in a country, due to the severe tightening of credit conditions, which can have an impact on global finance and cause lasting damage. Today, the failure of Silicon Valley Bank (SVB) affects more than $300 billion in bank assets, the largest amount in the last forty years, apart from the effects of the 2008 financial crisis.
Let us recall that, in mid-2008, the collapse of Lehman Brothers investment bank, a US global financial services company founded in 1850, caused panic in financial markets around the world. Excessive risk-taking, especially with the portfolios securitization in the mortgage market and the reduction in the information evaluation quality for granting loans, caused such a crisis.
Today, “the collapse of Silicon Valley Bank in the U.S. and the rescue of Credit Suisse in Europe have only one thing in common, but it was the root of the problems for both institutions: the abrupt rise in interest rates. For years, the unrestrained liquidity that Central Banks have put on the table has led many banks to obtain a whole free bar of funding and liquidity that is now beginning to be limited”. Thus, uncertainty and lack of confidence have put the financial systems of countries with large economies in check.
Factoring in the current banking crisis
The world of banking is extremely complex and it is difficult to identify its weaknesses. At present, mid-sized banks seem to be the hardest hit and some of them have been on the verge of collapse, with customers pulling out tens of billions of dollars in cash and taking it to banks that are better capitalized.
Under this reality, banks may find themselves in a difficult situation due to decreasing liquidity and increasing loan delinquencies. This may lead banks to reduce their lending and become more selective about their customers.
Factoring is a financial alternative, as it represents a highly attractive liquidity option for companies that sell on credit and need access to financing to maintain their working capital, a healthy cash flow and meet their expenses and payment obligations.
Factoring also allows companies to sell their outstanding invoices to a financial institution in exchange for a cash advance, enabling them to obtain the cash they need to maintain their cash flow and meet their expenses and payment obligations.
Mutuo Capital provides a financing tool, as an alternative in the current financial crisis, because it allows companies to obtain the cash they need to keep their operations running while waiting for their invoices to be paid.
Find out more about the exact process of International Factoring! Contact us.
References:
www.bbc.com (https://cutt.ly/a4Wmim0).
www.cnnespanol.cnn.com (https://cutt.ly/24Wn0wo).
https://cutt.ly/c4WnB29.