News
The second biggest bank failure in history
By Michael O’Connor, theislandinvestor.com
The answer…about four days.
This week was dominated by the second-largest bank failure in US history.
A lot has already been written about the collapse of Silicon Valley Bank (SVB), but let's break it down in simple terms and look at the potential implications for investors.
Firstly, the issues that unfolded in SVB were not driven by fraud or questionable lending policies but by an asset-liability mismatch. SVB used liquid customer deposits to purchase longer-dated but safe, treasuries and MBS securities.
Tech-based start-ups and VC companies represented the majority of SVB's customers. These customers made a lot of money in recent years as the value of their companies skyrocketed, and they needed somewhere to put all this cash. So they gave it to SVB.
Typically banks will make profits by taking that money and lending it out to customers at higher interest rates in the form of loans. However, the majority of SVB's customers didn't need loans, so SVB invested all that cash in longer-dated bonds.
So, they now have very liquid liabilities (deposits) being offset by not-so-liquid assets (longer-term bonds).
There is nothing inherently wrong with this. Banks do it all the time. However, this interest rate risk would typically be hedged using swaps, but SVB had no such interest rate hedges in place to protect itself. This was the fatal mistake. Some shocking risk management decisions left them making a massive bet on the direction of interest rates. As you have probably guessed by now, the gamble didn't pay off.
As interest rates went up, the bonds went down in value.
Still, this is a relatively avoidable disaster, provided all depositors don't require their money back at the same time.
Lo and behold, some customers got nervous and withdrew their deposits. As more customers did this, SVB had to sell some of the 'safe' bonds they had purchased at a $1.8bn loss in order to give money back to customers.
Then some venture capital companies advised their start-ups to get their money out of SVB, which spooked customers further.
From there, more money is withdrawn, so SVB sells more bonds and books more losses … the vicious cycle feeds on itself until it's all over.
Two takeaways
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While these latest developments are reminiscent of the GFC days, there are some crucial differences.
In my opinion, the risk of contagion remains low, mainly due to the Fed's decision to step in and protect deposit holders on Sunday evening.
Also, large US banks (above $250 Billion) have greater regulation scrutiny, have less concentrated exposure to a single niche and have smaller investment portfolios relative to total assets. Almost 60% of SBV's total assets were held in its investment portfolio vs a 25% average for US banks.
From here, I expect to see further concentration in the banking sector. Customers will flow from Tier 2 banks towards the larger (too big to fail) fully regulated institutions.
People are finally starting to realise that banks don't hold your money safely in a vault. You are simply a largely unsecured creditor in a system leveraging your money to make profits.
Bank deposit rates remain close to zero, so you are getting all the risk and none of the reward.
At the very least, any money that isn't needed for day-to-day living should be moved into very short-term T-bills or Euro bonds. These provide higher returns and a better level of protection for your assets. It's a no-brainer.
If you would like me to help you go from uninvested to invested, email mike@theislandinvestor.com or scan the QR code.
New Dutch flights to connect Groningen and Kerry Airport
Tourism across Kerry is set for a boost following the announcement of direct charter flights from the Netherlands to Kerry Airport for the 2027 summer season.
Dutch tour operator BBI Travel will introduce weekly flights from Groningen Airport Eelde to Farranfore every Thursday from April 29 to September 6, 2027. The service will be operated by regional carrier Sky Alps using its fleet of aircraft.
The announcement comes following strong passenger growth at Kerry Airport, which handled 440,367 passengers in 2025 before recording a further 12 per cent increase during the first six months of 2026. The new European link will provide direct access for Dutch tourists visiting Killarney National Park, Muckross House, and the wider Wild Atlantic Way route.
BBI Travel, which has specialised in Irish travel packages since 1963, will offer combined flight, accommodation, and car hire packages. The service will run alongside the operator’s existing Monday flights to Ireland West Airport Knock, allowing open-jaw itineraries across the west coast.
Welcoming the new route, Kerry Airport Customer Service Manager Evelyn Crowley said:
“We are delighted that BBI Travel has chosen Kerry Airport as its new destination for 2027. BBI Travel has an excellent track record and more than 60 years’ experience in bringing visitors to Ireland, so this new partnership is a significant vote of confidence in Kerry and the wider south-west as a destination for Dutch holidaymakers.
“The great advantage for passengers is that they arrive right in the heart of Ireland’s tourism capital. Kerry Airport is just 15 minutes from Killarney and Tralee, on the doorstep of the spectacular Ring of Kerry and within 50 minutes of Dingle and the Wild Atlantic Way.
“Our new state-of-the-art Arrivals Hall, with modern baggage handling and passport control facilities and our staff will provide a warm and efficient welcome from the moment passengers land in Kerry.
“That convenience continues on the journey home, with a short and efficient trip through security into our spacious and comfortable Departures Lounge. Passengers can enjoy a local tipple in Peig Sayers Bar or a snack in the Sky Bar before boarding their direct flight back to Groningen.
“We look forward to working with BBI Travel and welcoming their passengers to Kerry in 2027.”
Packages and flights for the 2027 summer schedule are expected to go on sale through BBI Travel in the coming months.
Eoin Cashman named Kerry’s sole Naughton Scholar
Scoil Phobail Sliabh Luacha student Eoin Cashman has been honoured as County Kerry’s sole recipient of the prestigious Naughton Scholarship for 2026.
Eoin received the award at an official ceremony held at Trinity College Business School on Saturday, October 17.
The Naughton Scholarships recognise outstanding students entering third-level education in STEM subjects, including science, technology, engineering, and mathematics.
Eoin was accompanied at the Dublin presentation by his parents, Marian and Pat Cashman, alongside SPSL Principal Mairéad Lucey.
The scholarship follows an exceptional Leaving Certificate performance where Eoin achieved seven H1 grades. His passion for STEM extended well beyond the classroom, having reached the SciFest 2025 National Final as overall runner-up and winning the Regeneron International Science and Engineering Award to represent Ireland in Phoenix, Arizona.
The funding will support Eoin in his current studies at University College Cork, where he is pursuing a Bachelor of Science degree in Physics and Astrophysics.
As part of the award, Eoin will travel to Kylemore Abbey in March 2027 for a special gathering bringing together past and present Naughton Scholars from across Ireland.
Speaking at the ceremony, Minister Jennifer Carroll MacNeill TD congratulated the scholars, encouraging them to maintain critical thinking and independent thought throughout their third-level journeys. Mrs Carmel Naughton also addressed the gathering, expressing immense pride in the class of 2026.
SPSL Principal Mairéad Lucey commended the Rathmore student on his achievement:
“Eoin’s academic achievements are a source of immense pride for the entire SPSL school community. His Naughton Scholarship follows an exceptional Leaving Certificate performance in 2026, when he achieved seven H1 grades as well as his strong commitment to STEM beyond the classroom, reaching the SciFest 2025 National Final and being awarded Overall Runner-Up and also winning the Regeneron International Science & Engineering Award, earning them the right to represent Ireland at the Regeneron ISEF world finals in Phoenix, Arizona.”
The school management and wider Rathmore community extended their congratulations to Eoin and his parents, Marian and Pat, as he continues his academic career in UCC.
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