Bryan Bedder
Billionaire investor Bill Ackman expects more bank runs starting Monday morning after Silicon Valley Bank, the California-based subsidiary of SVB Financial Group (NASDAQ:SIVB), collapsed after what turned out to be the largest bank run in United States history.
This week SVB Financial (SIVB) lost more than 60% when California regulators shut down SVB on Friday after the firm, a key player in the tech and venture capital community, witnessed the biggest US bank failure since the global financial crisis more than a decade ago. .
SVB clients withdrew $42 billion from their accounts on Thursday, dwarfing the previous largest bank run in US history, where Washington Mutual bank depositors withdrew funds of $16.7 billion over ten days.
The Federal Deposit Insurance Corporation (FDIC), which took control of the deposits, later said that SVB customers could fully access their insured deposits as early as Monday morning.
“From a source I trust, depositors (SVB) will get ~50% on Mondays and Tuesdays and the balance will be based on value realized over the next 3-6 months.” Ackman tweeted on Saturday.
“If this proves true, I expect bank runs starting Monday morning on a large number of non-SIB banks,” he said in a possible reference to banks that are not systemically important to the financial system.
“In the absence of a system-wide deposit guarantee (FDIC), more bank runs begin Monday morning,” the Pershing Square founder wrote, adding: “No company will stand the slightest chance of losing a dollar of deposits, as there is no reward for this risk. ”
Following the SVB collapse, regional banks were among the biggest decliners in the financial sector this week, with PacWest Bancorp (PACW) shedding 55% and Signature Bank (SBNY), Western Alliance (WAL) and First Republic Bank ( FRC) all fell more than 30%.
The S&P Bank Index (KBE) fell more than ~15%, posting the biggest weekly drop since the start of the pandemic in March 2020.
Before SVB’s failure, Ackman urged a government bailout to protect bank depositors, noting that “VC-backed companies depend on SVB to get loans and keep their operating cash.”
