The Silicon Valley Bank is known to be one of the biggest lenders of the country and multiple tech giants that have their services across the world, are clients of this financial institution. The downing of shutters on the organisation has caused panic not only in the tech circles but also sent investors and depositors into a frenzy.
US regulators closed down the Silicon Valley Bank on Friday and took control of all its deposits and assets. This development has been mentioned by many as the biggest dip in terms of the retail banking sector since the global financial crisis of 2008.
This action was taken after their share prices plummeted during the last few days as customers took to withdraw their cash from the bank. A statement released in the middle of the week mentioned that the bank had lost nearly $2 billion due to the changes in US financial policies in the post covid era.
The bank which had earned huge margins from their investments in tech giants put in a large amount of their assets into US bonds. As the government raided the interest rates to control retail inflation, the value of the bonds decreased. Also the failure of multiple startups and decreasing funds in the startup sector led to the further downfall of the finances of the bank.
It is believed that at the time of closure, the bank still had about $175 billion in terms of customers’ money and is now in control of the Federal Deposit Insurance Corporation. A new entity named the National bank of Santa Clara has been floated to hold all the assets of the Silicon Valley Bank as of now. The FDIC had mentioned that the clients will be able to access their deposts across all branches on Monday, and that the financial instruments of the old organisation will still be honoured.
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