The banking turmoil

Jeff Chiu / AP  

The banking turmoil  

The SVB managers' bonuses increased their risk propensity  

The peaks in Silicon Valley Bank's compensation were directly linked to the bank's return on capital. With high return targets, they increased the risks in their portfolio, FT reports with reference to sources.

It was above all by buying long bonds, especially housing bonds, that the managers got the return and thus their bonuses. But then, when the interest rate policy was quickly changed, the blow became particularly hard for these types of bonds with long maturities. 

Linking executive bonuses to capital returns in this way became an "incentive to take risks", according to Stanford professor Anat Admati.

Shutterstock Europe's bank 

shares fall: "Concerns of a financial crisis"  

Europe's banking shares take another dive downwards on Friday after renewed concerns about financial stability, Bloomberg and CNBC write. 

“The Fed is no longer what the markets worry about, and they don't really worry about recession either. What the markets are now worrying about is a financial crisis," writes Brad McMillan, chief investment officer at Commonwealth Financial Network, according to Direkt. 

Deutsche Bank plummets 11 percent after the bank's credit default swaps surged in value over the past two days. The swaps are a way for bondholders to insure themselves against the effects if the bank were to suspend payments.  

German colleague Commerzbank and French Société Générale both fall 6-7 percent, while UBS retreats 5 percent. Even in Stockholm, all major banks are trading in the red.