© Reuters. A Tel Aviv Stock Exchange sign is seen at the Tel Aviv Stock Exchange, Israel, November 4, 2020. REUTERS/Amir Cohen
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by Steven Scheer
JERUSALEM (Reuters) – Israeli stocks fell more than 4% on the Tel Aviv Stock Exchange (TASE) on Sunday led by financial firms following the bankruptcy of SVB Financial Group late last week, as the government vowed help affected Israeli tech firms.
With Israel’s trading week running from Sunday to Thursday, it was the first opportunity for Tel Aviv investors to react to the failure of Silicon Valley Bank, the biggest bank to fail since the 2008 financial crisis, but largely seen as an isolated event.
Banking regulator Yair Avidan said the SVB bankruptcy was an unfortunate opportunity to emphasize what is often taken for granted: ensuring the stability of the financial system.
“We are closely examining the case and monitoring both immediate developments and those that may emerge in any ‘next wave’ that may take place,” said Avidan, the Bank of Israel’s Supervisor of Banks.
He said he was forming part of an inter-ministerial team set up by the Finance Ministry to monitor, analyze and formulate a response as necessary.
Israel’s tech sector is the country’s main growth engine and its relationship with the Silicon Valley region is strong. Many new Israeli companies had accounts at SVB, although the amounts are not fully known.
Israel’s securities regulator said that because the closure of SVB may have local consequences, it warned public companies to report immediately in case there is any material effect on their activities or a significant effect on their share price. .
Compugen (NASDAQ:) Ltd said that, through its US subsidiary, it currently holds around 1.3% of its cash and cash equivalents in SVB, but “regards its exposure to any liquidity issues at SVB as irrelevant.”
NextVision, a maker of micro-stabilized cameras, said in a filing with regulators in Tel Aviv that it withdrew almost all of the $2.7 million it held at SVB on Thursday.
Qualitau Ltd, a developer of test equipment for the semiconductor industry, said it held nearly $17 million in SVB, most of it uninsured by the federal government.
He added that he “did not have information about the amounts of money that he will be able to withdraw in the future from the balance of funds deposited with SVB and in relation to the moment when it will be possible to withdraw these funds.” Given the existing order backlog, he said that he will continue with his activities.
Video platform developer Idomoo said it was working to withdraw its $3 million balance from SVB, while technology venture fund Teuza said that while it had no funds in SVB, portfolio company Tyto Care had the 35% of his cash balances there and was working to transfer funds to Israel or another US bank.
The Tel Aviv index of the five biggest banks was down 4% in afternoon trading, while the index of eight insurers fell 4.7%. Government bond prices rose as much as 0.8%.
Prime Minister Benjamin Netanyahu said he would discuss the crisis with his finance and economy ministers and the Bank of Israel governor to see “if there is any action needed to help Israeli companies that have fallen into difficulties, especially liquidity problems, after the collapse of SVB”. .”
“We have an obligation, of course, to try to protect these companies, whose main operations are in Israel and will remain in Israel, and also their employees,” he told cabinet ministers in a veiled rebuke of senior executives. tech who actively protested the government’s planned judicial reforms and those who said they would take money out of Israel.
He added that Israel’s economy is “one of the most secure and stable economies in the world.”
Data released on Sunday showed that Israel’s economy grew by 6.4% in 2022 and an annualized 5.6% in the fourth quarter.
Israel’s two largest banks, Leumi and Hapoalim, said their tech banking arms would provide loans to startups and other tech companies that did not have access to credit following the collapse of SVB.
Leumi said he was able to help clients transfer around $1 billion to Israel from SVB before the Federal Deposit Insurance Corporation (FDIC) was appointed as receiver for the subsequent disposition of the US bank’s assets.
