The next banking calamity: office blocks

When markets are in ‘seek and destroy’ mode, like the last dragon in Game of Thrones, it’s fruitless to guess where they might attack next. Silicon Valley Bank’s excess of deposits was not in itself a signal of distress. Credit Suisse’s balance sheet was stronger than those of many other leading European banks. Deutsche Bank is a lot better-managed than Credit Suisse. But still investors swarm in search of weaklings.

And their next focus – alongside the impact on bond portfolios of fast-rising interest rates, as in SVB’s case – will be the most traditional of all causes of banking crises: commercial property. America has $20 trillion worth of it. The Green Street Commercial Property Price Index, a leading indicator, is down 15 per cent in a year across the sector, with the biggest falls in urban office values, where space stands empty as working from home takes permanent hold. Institutional investors are shunning real estate for higher yields at lower risk on government bonds.