Asset Liability Management 2025

Course Introduction The collapse of Silicon Valley Bank (SVB) highlighted once again that banks can collapse even when holding credit risk-free assets. Credit losses such as those which triggered the 2008 global financial crisis are not the only losses that can bring down a bank. Unless a bank manages its assets in conjunction with its liabilities, it can leave itself exposed to a bank run. Mark-to-market losses on unhedged fixed income portfolios become realised losses if these losses trigger withdrawals, forcing asset sales, as depositors lose confidence in the bank.