Executive summary

The collapse of the award-winning Silicon Valley Bank (SVB), followed by Signature Bank and First Republic Bank - all in the US - sparked extensive analyses to zero in on the causes.

Much of this scrutiny has been around critical topics such as stress testing, hedging, concentration risk and liquidity buffer management.

To boot, more regional US banks are reportedly under the pump. What’s also unhelpful is that US interest rates are expected to be higher for longer.

Which begs the question, what about European and Asia-Pacific banks? Are they facing similar challenges? How would an SVB, First Republic or Signature have fared had they been European banks?

Can we attribute the difference in the financial strain faced by the US and European banks to the variance in regulatory practices on both sides of the Atlantic?

A lot of unanswered questions, ponderables and nuances, indeed.

Given the backdrop, this whitepaper examines and compares the classification, hedging and accounting practices related to debt securities under GAAP and IFRS.

Additionally, it analyses the cash and debt distribution of a few US and European banks.