key takeaways
- Silicon Valley Bank was closed by the California Department of Financial Protection.
- Trading of several regional banks, including crypto-supporting Signature Bank, has been halted after their shares experienced severe volatility.
- Silicon Valley Bank announced Wednesday that it had taken extraordinary steps to shore up its finances.
Share this article
Silicon Valley Bank, the 18th largest bank in the US by total assets, was closed today by regulators after suffering a bank run.
The biggest bank failure since the Great Recession
The banking sector is being affected.
Early Friday, the California Department of Financial Protection and Innovation Announced the closure of Silicon Valley Bank. All FDIC-insured deposits were transferred from SVB to the Deposit Insurance National Bank of Santa Clara. The FDIC indicated that all insured depositors would have full access to their insured deposits by March 13, while uninsured depositors would receive certificates for the amounts of their uninsured funds.
Trading in several regional bank shares, including SVB, Signature Bank, First Republic Bank, PacWest Bancorp and Western Alliance Bancorp, had already halted following news of Silicon Valley Bank’s liquidity problems.
As of this writing, SVB is down 67% on the weekly, Signature Bank 27%, First Republic 30%, PacWest Bancorp 37% and Western Alliance 29%.
Silicon Valley Bank unexpectedly announced Wednesday that it was taking extraordinary and immediate steps to shore up its finances. The bank disclosed that it had sold $21 billion of its most liquid assets, borrowed $15 billion and tried to raise cash by staging an emergency sale of its shares.
The news sparked a wave of withdrawals on Thursday as tech startups, which make up the vast majority of the bank’s clients, sought to move their funds to a safer location. According CNBC, SVB Financial (the parent company of Silicon Valley Bank), having failed to raise enough capital to prop up its operations, began looking to sell itself. At the time of its closure, Silicon Valley Bank was the 18th largest bank in the US by total assets.
Disclosure: At the time of writing, the author of this article owned BTC, ETH, and various other crypto assets.
