Suddenly and without introduction, the US authorities announced, on Friday, that they had closed a bank "Silicon Valley" Close to the technology community, which caused a wave of panic as markets questioned the consequences of the largest bank bankruptcy in the United States of America since the global financial crisis, in 2008, according to what was reported by Agence France-Presse.
The famous bank failed to deal with the massive withdrawals made by its clients of their money, especially players in the technology field, and its attempts to raise capital quickly did not succeed.
The Federal Deposit Insurance Corporation in the United States plans to reopen the bank’s 17 branches, which are based in California and Massachusetts, on Monday, and allow customers to withdraw up to $ 250,000 in the short term, which is the amount that is usually guaranteed by the institution.
According to AFP, at the end of 2022, the bank had assets of $209 billion and deposits of $175.4 billion.
And"Silicon Valley Bank" It is the sixteenth largest US bank by assets, and represents the second largest retail bank bankruptcy in the United States.
Massive panic According to AFP, a wave of panic began in the markets, and the four largest US banks lost $ 52 billion in stock exchanges, followed by Asian and then European banks.
Reasons for the collapse site transfer "Al Jazeera" about a magazine "The Economist" The British reported on the causes of the collapse and its impact on the financial system in the United States, and talked about the possibility of state intervention to save the bank.
The report indicated that the reason for the crisis the bank was exposed to is that its deposits have more than quadrupled in 4 years (from $44 billion in 2017 to $189 billion at the end of 2021), while its loans to emerging companies have grown from $23 billion to $66 billion.
And since banks reap profits from the difference between the interest rate they pay on deposits and the rate paid by borrowers, having a much larger deposit base than the loan book represents a problem whose solution requires the bank to obtain other interest-bearing assets, so we find that the bank has invested $128 billion by the end of 2021. , mostly in high-priced mortgage and treasury securities (peak rates).
Then the world changed – according to the report – interest rates rose as inflation took hold and bond prices fell, leaving a bank "SVB" Uniquely exposed, customers reduced their deposits from $189 billion at the end of 2021 to $173 billion at the end of 2022.
The bank was forced to sell its entire portfolio of liquid bonds at lower prices than it was, incurring losses amounting to about $1.8 billion, which left a gap that it tried to fill by increasing the capital, but it did not succeed.
Is it an exception? The report asked whether the crisis of this bank was an exception, saying that although it was exceptionally vulnerable to withdrawing depositors’ money from it, almost all banks are exposed to losses in their bond portfolios.
