Silicon Valley Bank was closed down by authorities in the United States on Friday, sent global banking shares sputtering as markets worried about possible contagion from America’s largest banking collapse since the 2008 financial crisis.
SVB, a key lender to American startups since the 1980s, was seized by US authorities after a run on deposits rendered it impossible for the medium-sized bank to stay viable on its own.
SVB specialized in startup financing and had grown to become the 16th largest US bank by assets, with $209 billion in assets and about $175.4 billion in deposits at the end of 2022.
Its demise not only symbolizes the greatest bank failure since Washington Mutual in 2008, but also the second largest failure for a retail bank in the United States.
Treasury Secretary Janet Yellen called an emergency meeting of senior US financial regulators in reaction to the sudden collapse.
“Secretary Yellen expressed full confidence in financial regulators to respond appropriately, noting that the banking system is robust and regulators have adequate tools to manage this sort of situation,” according to a Treasury statement.
SVB’s travails have raised worries that more banks may face catastrophe as the repercussions from rising inflation and higher interest rates squeezes weaker institutions. SVB is situated in the shadow of the world’s largest tech companies.
On a rainy day in Santa Clara, California, nervous clients chatted in small groups, asking how they might withdraw their money as word of the federal seizure spread.
One client, who spoke on the condition of anonymity and dressed in a t-shirt and sweatpants, said he used the bank for payroll at his firm.
“This isn’t a good scenario. “A lot of very top tier (venture capital companies) have a lot of exposure here,” he said, adding that he was worried for his staff.
Disclaimer
The provided information is intended for general awareness and may not be entirely accurate or up-to-date. The post disclaims any warranties regarding the completeness, accuracy, or reliability of the content, services, or graphics on the website. It advises caution when using the information for any purpose.