UPDATE 2-Buffett: Do not panic about U.S. banks and deposits

Kitco Media
By Reuters
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Reuters
(Adds Buffett comments, byline) By Jonathan Stempel April 12 (Reuters) - Warren Buffett said people should not be panicked about the banking industry or the safety of U.S. bank deposits, despite the recent failures of Silicon Valley Bank and Signature Bank. The billionaire chairman of Berkshire Hathaway Inc said that while more banks "will go bust," the industry's recent problems do not resemble those that helped trigger the 2008 global financial crisis. "People shouldn't be worried about losing their money and their deposits they have in an American bank, but the message has gotten very confused," Buffett, 92, said on CNBC.


"You don't need to turn a dumb decision by managers into panicking the whole citizenry of the United States about something they don't need to be panicked about," he added.


Berkshire's equity portfolio includes several banks, including a $34.2 billion year-end stake in Bank of America Corp . The Omaha, Nebraska-based conglomerate also owns dozens of businesses including the BNSF railroad and Geico insurance.


Silicon Valley Bank, which had an unusually high amount of uninsured deposits, collapsed on March 10 after a wrong-way interest rate bet left it with big investment losses and a shortage of capital, causing a bank run.


Signature Bank failed two days later, after having made a play for cryptocurrency deposits. By March 19, two other banks on the edge got help, with First Republic Bank receiving a $30 billion deposit infusion from other banks, and Credit Suisse Group AG selling itself to UBS AG . Buffett says banks have "mismanaged" assets and liabilities for a long time, and "every now and then it bites them in a big way."


He said banks' directors should ensure that top executives face consequences for mistakes that hurt shareholders.


The Federal Deposit Insurance Corp insures deposits for up to at least $250,000 per depositor per FDIC-insured bank. Buffett also said he would bet $1 million that no American depositor would lose money from a bank failure in the next year.


He proposed that if someone wagered the other way, the loser would donate the combined $2 million to charity.


"That's a firm offer," he said.


Buffett spoke from Tokyo, where he was visiting five large Japanese trading houses in which Berkshire invests. (Reporting by Jonathan Stempel in New York; editing by Jason Neely and Chizu Nomiyama)

Messaging: jon.stempel.thomsonreuters.com@reuters.net))
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