US banks often perform worse than European institutions when it comes to management quality

Frankfurt The bankruptcy of the Silicon Valley Bank (SVB) revealed how important governance, i.e. the principles of good corporate management, can be. The Californian institute, which went bankrupt in March, lacked it, the US Federal Reserve’s cause report shows. The bank’s growth and complexity overwhelmed the abilities of the bank’s boards of directors and executives, and weak risk management, the report said.

Metzler Asset Management’s Sustainable Investment Office took the SVB bankruptcy as an opportunity to compare the management quality of 179 listed American banks with those of 47 listed European banks. The result is not very flattering for the US institutions: They show weaknesses much more often than their European competitors. This also applies to many of the troubled US regional banks such as Pacwest.