NEW YORK — US authorities rushed to take control of Silicon Valley banking assets after a wave of depositors wanted to withdraw their money.
The country’s 16th-largest bank has collapsed after depositors worried about the bank’s balance sheet – mostly tech and venture capitalists – decided to withdraw their money this week. It is the second-largest bank failure in US history, after Washington Mutual at the height of the financial crisis more than a decade ago.
Silicon Valley Bank was very tightly tied to the finances of tech companies, and its troubles are unlikely to spill over to the rest of the banking industry, as happened in the months leading up to the “Great Recession” there. is over ten years old. . The country’s largest banks, which are more likely to become a source of systemic economic problems, are doing well today with their balance sheets and capital.
Jitters in the banking sector continued throughout the week, and the Silicon Valley bankruptcy sent shares of nearly every financial institution plummeting on Friday, already down double digits since Monday.
The collapse of Silicon Valley has happened with incredible speed. Some industry analysts said as early as Friday that it was a good company and a smart investment. The bank’s management tried Friday morning to raise capital and find additional investors. However, trading in the bank’s shares was suspended before the start of trading on Wall Street due to extreme volatility.
Shortly before noon, the Federal Deposit Insurance Corporation (FDIC) decided to close the bank. The company could not immediately find a buyer for the bank’s assets, indicating how quickly depositors were withdrawing cash. The remaining uninsured deposits will be under external management.
At the time of the bankruptcy, the bank’s total assets were $209 billion, according to the FDIC. It’s unclear how much of the deposits exceeded the $250,000 insurance limit, but previous regulatory reports have shown the proportion to be significant.
