On Friday, US banking regulators shut down Silicon Valley bank after customers withdrew $42bn. Tech-focused banks fail in eleventh-hour attempts to raise new capital. It’s the second largest bank failure in the history of the US. Previously, in 2008 Washington Mutual collapsed.
The California Department of Financial Protection and Innovation closed the bank. Additionally, appointed the Federal Deposit Insurance Corporation as receiver.
Collapse of Silicon Valley Bank represents contagion risk
Meanwhile, professional investors believe its contagion risk to the global financial system. Investor and Author Danielle Ecuyer said, ‘’there is going to be a lot of fallout from this.’’ She says it was extremely lucky that the regulators moved in late on friday. Ecuyer says, ‘’ it’s really good it’s a friday.’’ It gives the Analyst 48 hours to work out. Otherwise, there would be another ‘’Leman event.’’
However, some industry analysts say it was a good company and a wise investment. Ecuyer says,”Half of US venture capital firms are backed by this company — it has very deep tentacles into existing start-up companies across the US.”
Customers rush to withdraw their deposits
Silicon Valley Bank Set to Reopen on March 13, Customers to Have Full Access to Insured Deposits by Monday Morning, Confirms FDIC. The main office and all branches of Silicon Valley Bank are set to reopen on March 13, as confirmed by the FDIC. Insured depositors can expect full access to their deposits no later than Monday morning.
Customers have been withdrawing their deposits, concerned that the bank may struggle to pay up in the future, prompting regulators to step in to prevent a bank run.
However, the bank appears to be facing challenges due to decisions made by the US Federal Reserve on interest rates, according to Ms Ecuyer.
“The US Federal Reserve does not want to have to deal with a financial crisis that would force it to ease monetary policy,” Ms Ecuyer said.
