The failure of Silicon Valley Bank on Friday sent investors and depositors into a frenzy as it was recognized for funding some of the largest technology startups. The most severely affected sectors of the global markets were bank shares.
Here are 10 facts about the collapse of the Silicon Valley Bank
California banking officials closed the Silicon Valley Bank on Friday. Since the global financial crisis of 2008, this failure in retail banking has been the largest. In what amounts to the largest retail banking collapse since the global financial crisis, US regulators shut down Silicon Valley Bank (SVB) on Friday and seized its money. (https://www.winecountry.com/)
The action was taken following a dramatic 48 hours that saw the share price of the high-tech lender crash amid a run on deposits by anxious clients. Silicon Valley Bank made a tremendous profit by investing in tech businesses and then placed the majority of its assets in US Treasuries. The federal reserve started hiking interest rates last year in an effort to reduce inflation rates, which caused bond values to decline.
The National Bank of Santa Clara will now hold all of the Bank’s assets
Following the Covid epidemic, startup funding also began to decline, which led to a large proportion of the bank’s customers withdrawing cash. Silicon Valley Bank was compelled to sell some of its investments even though their value had decreased in order to comply with their requests. The bank disclosed earlier this week that it had suffered a loss of around $2 billion.
With the bank’s liquidation, the Federal Deposit Insurance Corporation is now in charge of over $175 billion in customer deposits (FDIC). The National Bank of Santa Clara, a new institution established by the FDIC, will now hold all of Silicon Valley Bank’s assets.
The FDIC assured customers that they will have complete access to their insured deposits as soon as all of the bank’s branches opened on Monday morning. Additionally, the financial body stated that checks from the previous bank will also be honored. Some Silicon Valley business owners are furious and in the dark following SVB’s unexpected departure. Politicians in Washington are taking positions, and Biden administration officials have expressed “complete faith” in the regulatory system.