Hello. It looks like you�re using an ad blocker that may prevent our website from working properly. To receive the best Tortoise experience possible, please make sure any blockers are switched off and refresh the page.

If you have any questions or need help, let us know at memberhelp@tortoisemedia.com

Sensemaker: Crash test dummies 

Sensemaker: Crash test dummies 

What just happened

Long stories short

  • Everything Everywhere All at Once won best picture at the Oscars, as Michelle Yeoh became the first Asian best actress winner. 
  • NHS junior doctors began a 72-hour strike, including across emergency care departments, in a dispute over pay and conditions.
  • Xi Jinping vowed to turn China’s military into a “great wall of steel” in the first speech of his new presidential term.

Crash test dummies

British bankers and ministers worked through the night to secure a £1 rescue deal with HSBC for the UK subsidiary of Silicon Valley Bank, but they weren’t the only people who had a busy weekend. Since the collapse of SVB’s mothership in California on Friday – the biggest US bank failure since 2008 – US regulators have 

  • closed another bank (Signature Bank, a crypto specialist) in New York;
  • promised both banks’ depositors they will be repaid in full; and
  • set up a new federally-backed fund for other banks worried about their balance sheets.

So what? This is not 2008 all over again. Not yet, at any rate. Any bank run is a major medical emergency for the global financial system but the damage so far this time has been restricted to banks that took rash bets and failed to diversify. Markets this morning are stable, considering. That said…

  • The “who’s next?” question is still live as shares at a third institution, First Republic Bank, tumble in pre-market trading following reports that it has had to line up $70 billion in extra liquidity.
  • The post-mortem on missed warning signs at SVB is only just beginning.
  • In the meantime it will get harder for tech and life sciences start-ups to access finance for expansion, especially if central bankers stick with their current strategy of fighting inflation with higher interest rates.

What happened at SVB? 

2017: as the bank grows to become one of the US tech sector’s favourite lenders it starts investing deposits in long-term fixed-rate US government bonds that offer a marginally higher rate of return than shorter-dated bonds but risk losing value if base rates go up.

2020-22: SVB’s deposits swell from $60 billion to $200 billion thanks largely to exploding venture capital investment in the US tech sector, half of whose smaller players bank with SVB.

2021: short-sellers begin studying SVB as a way to short the tech bubble because of its vulnerability to rate rises.

Feb-March 2023: falling deposit levels force the bank to sell assets at a $1.8 billion loss.

8 March: SVB announces a sale of new shares in which it hopes to raise $20 billion.

9 March: the share sale flops and a run on the bank begins. 

10 March: regulators close the bank.

By the numbers:

$42 billion – withdrawals from SVB last Thursday alone

minus $1 billion – balance of the bank’s main accounts by close of business on Friday

$250,000 – maximum deposit usually insured by the US Federal Deposit Insurance Corporation in the event of a run, although the Fed lifted that cap at the weekend ensuring all depositors at SVB and Signature Bank would be made whole

96 – percentage share of SVB customers with balances over $250,000 as of last week

$110 billion – assets held by Signature Bank last week, making it America’s 30th largest bank (SVB was the 16th largest)

£7 billion – deposits at SVB UK, the subsidiary sold this morning to HSBC for £1

Lessons so far. The lessons of the recent past may have helped protect the financial system from a full meltdown, but the risks of a tech-based future are still unknowable:

Contagion has been limited so far to niche players. Big banks with generous capital cushions required by the 2010 Dodd-Frank reforms look safe, but the Trump administration’s efforts to roll back those reforms may have increased risk for smaller challenger banks.

Taxpayers are not on the hook for the guarantees made over the weekend by the US and UK governments. Banks are. If this penalises banks with better governance than SVB, they may reflect that they survived at taxpayers’ expense last time around. 

Too big to fail? The mantra still applies to some – but not to SVB. 


It’s not easy being green
Europe is scrabbling to come up with an effective response to Biden’s $369 billion green subsidy act. Finding consensus on exactly how to do that is proving difficult. A debate over the proposed Net Zero Industry Act – which is expected to set minimum targets for domestic production in five key green tech sectors – has opened up a familiar quarrel between free-marketeers and state-aid advocates. The Netherlands and other small states are pushing for a level playing field within the single market, while others, notably France, say bigger economies should be able to pour large subsidies into green industry. Europe fears more of its companies will move operations stateside – but setting minimum domestic production targets risks increasing the cost of the continent’s decarbonisation. Leaked drafts say the NZIA will set production targets at 40 per cent of the EU’s requirement – this will be a huge increase in sectors like solar panels, where China currently dominates.


Arctic oil
The US has announced plans to protect 16 million acres of land and water in Alaska from new oil and gas leasing. Joe Biden’s administration will declare the entire US Arctic Ocean off-limits and write new rules to protect 13 million acres in the National Petroleum Reserve-Alaska. The move is intended to create a “firewall” against expanded oil development across the Arctic, an official told Bloomberg. But it is also an attempt to offset the environmental outrage that will come in if the US approves an $8 billion oil drilling project in Alaska known as Willow – a decision that could come as soon as today. The new rules would not apply to Willow because ConocoPhillips already holds leases; the project is expected to produce about 600 million barrels of crude over 30 years. “We need more than a firewall,” says Kristen Miller, executive director of the Alaska Wilderness League. “We need to put out the fire.”

The 100-year life health, education AND GOVERNMENT

Wegovy’s PR
Last week, Sensemaker argued that the arrival of much-hyped weight-loss drug Wegovy did not replace the need for preventative policies (like a broader sugar tax) to decrease obesity rates. A new investigation places a question mark over how some of the “hype” around Wegovy was created. The Observer reports that Novo Nordisk, the Danish pharmaceutical company that produces Wegovy, paid £21.7 million over the past three years to health organisations, charities and professionals – some of whom later praised Wegovy publicly without always fully declaring their financial links to the company. This includes clinical experts who gave evidence to Nice, the UK’s health cost-effectiveness watchdog who approved the drug last week. There is no suggestion that these payments broke any rules and Novo has said it has never “deliberately acted” outside ethical or legal standards. The recipients of funds said they were not influenced by it and properly declared their interests.

Our planet CLIMATE AND geopolitics

Power players
For decades, the US has been the most influential outside power broker in the Middle East. And yet, when Saudi Arabia and Iran announced on Friday that they would reestablish diplomatic ties, Washington was left on the sidelines. China hosted the talks that led to the breakthrough – with all parties pointedly agreeing not to use English in the negotiations, according to the Wall Street Journal. Iran and Saudi Arabia cut formal ties seven years ago: the new agreement gives them two months to reopen their embassies and reportedly includes a commitment from Iran to stop encouraging cross-border attacks on Saudi from Yemen by Iranian-backed Houthi rebels. It is a first step rather than a full regional realignment – but “seeing the Chinese role here will not warm any hearts in Washington,” says Michael Singh from the Washington Institute for Near East Peace Policy. China’s Xi Jinping is now planning a high-level summit with Gulf Arab monarchs and Iranian officials later this year, says the WSJ. There is a new player in town. 


Lineker returns
It started last Tuesday with a tweet; it ended this morning with an apology. The BBC has announced that Gary Lineker, a former footballer and the corporation’s highest-paid presenter, will return to his usual punditry this weekend. Lineker’s tweet criticised the government’s new Illegal Migration Bill as “immeasurably cruel” with language “not dissimilar to that used by Germany in the 30s”. Politicians, pundits and the BBC’s leadership then became embroiled in a heated discussion over impartiality and how it should be enforced for employees. Tim Davie, the BBC’s director-general, has announced an independent review of the broadcaster’s social media guidelines and how they apply to freelancers working outside news and current affairs. 

Further reading: James Harding, Tortoise editor and former director of BBC News, writes about Lineker and the BBC in his editor’s letter.

Further listening: Episode one of Boris Johnson: the six million pound man, which investigates how BBC Chairman Richard Sharp helped facilitate an £800,000 loan for the former prime minister during his time in office. 

The week ahead


13/3 – Latest GDP figures released by ONS; London Tech Week starts; junior doctors hold 72-hour strike action as Amazon workers in Coventry also go on strike; Scottish National Party leadership election ballot opens; Commonwealth Day, 14/3 – ONS releases unemployment and universal credit statistics; Cheltenham Festival begins; Unison annual conference takes place in Brighton, 15/3 – Budget TUC lead national day of action to coincide with Jeremy Hunt’s Budget speech as junior doctors, UCU staff, teachers in the NEU, civil servants in the PCS union, London Underground staff and BBC local radio staff all strike, 16/3 – Eating Disorders International Conference held in London; ONS release 2021/22 school pupil absence report, 17/3 – Liberal Democrat spring conference starts in York; Cambridge Science Festival begins; Ballot closes for Unite Heathrow Airport staff; Comic Relief host Red Nose Day, 18/3 – Final round of Six Nations fixtures; 19/3 – Mother’s Day 


13/3 – Joe Biden meets Rishi Sunak and Australia’s Anthony Albanese in California for defence talks; Catholic Church celebrates 10 years of Pope Francis’s papacy, 14/3 – European Union unveils its Net Zero Industry Act, 15/3 – Provincial elections in the Netherlands; 12th anniversary of Syrian anti-government protest movement, 16/3 – 73rd Fifa Congress begins in Kigali, Rwanda; European Central Bank interest rate decision; Czech Republic’s president visits Poland; Ukrainian billionaire Kostyantyn Zhevago due to appear in French court after Kyiv’s extradition request on suspicion of money laundering; French National Assembly receives pensions reform bill, 17/3 – St Patrick’s Day celebrations, 19/3 – Montenegro presidential election; Saudi Arabian Grand Prix

Thanks for reading. Please tell your friends to sign up, send us ideas and let us know what you think. Email sensemaker@tortoisemedia.com.

Giles Whittell

Additional reporting by Jess Winch, Barney Macintyre and Phoebe Davis

Photographs Getty Images

Choose which Tortoise newsletters you receive