U.S. regulators shut down Silicon Valley Bank
U.S. financial regulators shut down the Silicon Valley Bank on Friday and seized its assets. SVB focuses on financial services for start-ups companies and plays a prominent role in the Israeli and U.S. high-tech sectors.
The U.S. Federal Deposit Insurance Corporation seized 175 million dollars of the bank’s deposits, making this the biggest bank failure since the global financial crisis in 2008. The bank’s overall assets are valued at 209 billion dollars.
The FDIC announced on Friday that clients with deposit insurance will be able to access their funds no later than Sunday morning.
A significant portion of Israeli high-tech companies keep their deposits in SVB which operates a branch in Israel. Following the sharp drop in the bank’s share price, many local companies have been trying to transfer their assets to other banks, which will worsen the crisis.
- Amid judicial coup, tech unicorn pulls $500 million out of Israel
- The pincer movement that endangers Netanyahu’s judicial coup
- Protest leaders call for shut down of Israeli economy for the second consecutive week
The drop in share price occurred after SVB announced on Wednesday that it was selling 2.25 billion worth of shares, and selling assets at a loss in order to balance its finances. This happened as a result of increasing numbers of start-ups withdrawing deposits following a drop in venture capital investments.
Wall Street saw a continued drop on Friday but analysts claim fear of contagion from SVB’s collapse are relatively minor due to protections put in place across the financial industry after the global financial crisis. The risk seems even smaller if the bank’s clients can access their deposits in full as promised.