Silicon Valley Bank was shut down on Friday by California regulators.
Silicon Valley Bank, known for lending money to some of the biggest technology startups, collapsed on Friday sending investors and depositors into a frenzy. The closure has also resulted in global markets falling sharply today.
Here are 10 facts about the Silicon Valley Bank collapse:
- The Silicon Valley Bank was closed on Friday by California banking regulators. This is the biggest retail banking failure since the global financial crisis in 2008.
- US regulators shuttered Silicon Valley Bank (SVB) on Friday and took control of its deposits.
- The move came after a dramatic 48 hours that saw the high-tech lender's share price plummet amid a run on deposits by concerned customers.
- After making a huge fortune by investing in tech startups, Silicon Valley Bank invested most of its assets in US bonds. To bring down the inflation rates, the federal reserve last year began raising interest rates, which resulted in the bond values going down.
- Startup funding also started to dry up after the Covid pandemic, resulting in a high number of the bank's clients withdrawing money. To honor their requests, Silicon Valley Bank was forced to sell some of its investments even though their value had declined.
- In a disclosure earlier this week, the bank said it had lost nearly $2 billion.
- After the bank's closure, nearly $175 billion of customer deposits are now under the control of the Federal Deposit Insurance Corporation (FDIC).
- The FDIC has created a new bank, the National Bank of Santa Clara, which will now hold all the assets of Silicon Valley Bank.
- The FDIC has assured depositors that they will have full access to their insured deposits after all the branches of the bank open on Monday morning. The financial body also said that cheques of the old bank would also be honoured.
- SVB's abrupt demise has left legions of Silicon Valley entrepreneurs in the lurch and livid. In Washington, politicians are drawing up sides, with Biden administration officials expressing "full confidence" in regulators.
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