The US authorities close the Silicon Valley Bank
The supervisory authority of the banking system of the California closed today, Friday 10 March, the Svb Financial Group. The Authority has also ordered the liquidation of the institute’s assets, heavily exposed to the start-ups of the Silicon Valley. The Authority’s decision is intended to protect depositors after the bank’s crisis rocked global markets and pushed bank stocks down.
Silicon Valley Bank is the first institute insured by the Fdic (the US deposit protection scheme) to fail from October 2020. At the time, the Fdic had intervened to protect the Almena State Bank, in Kansas.
Shares suspended from trading
Exchanges of the shares of Svb were suspended from trading after losing the 66% in pre-exchange trading. Svb, which operates under the brand Silicon Valley Bank, did not comment. Previously, in an internal meeting with the employees, the managers had explained that they were having a series of interviews to decide the next steps for the institute.
In the note to employees, published by Reuters, the company asked “all employees to work remotely today and until further notice. Further information will be communicated as soon as possible.”
The failure of the recapitalization
The Secretary of State for the Treasury, Janet Yellentold MPs that the Treasury Department was following developments in the situation.
To trigger the crisis, one multibillion-dollar loss in the bank’s bond portfolio triggered by the rate hike. The institute has been seeking a recapitalization since $2.25 billion, which however did not go through. As customers started withdrawing their deposits.