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2023-03-12 Economy
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After the collapse of the SVB, US banks face serious difficulties
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Direct Translation via Google Translate. Edited.
[REGNUM] After the sudden collapse of Silicon Valley Bank (SVB), other US banks may also face serious problems, according to the New York Times on March 10.
After the California Department of Financial Protection declared bankruptcy of SVB, it transferred $175 billion of bank assets under the control of the Federal Deposit Insurance Corporation. To store them, the Federal Corporation urgently created a new bank - the National Bank of Santa Clara. He will begin work on the morning of March 13. It is claimed that the checks issued by the SVB will continue to be paid.
SVB, which profited from high-margin startups, bought a huge amount of bonds over a year ago. Like other banks, SVB kept a small part of the deposits in its accounts and invested the rest in the hope of making a significant profit.
This policy worked well until the US Federal Reserve began raising interest rates last year in an attempt to reduce inflation. At the same time, start-up revenues began to fall. Therefore, many clients began to urgently withdraw their money from SVB. The bank, trying to cope with the situation, was forced to sell some of its securities just at the moment when their value dropped significantly. This resulted in a rapid loss of nearly $2 billion.
A similar situation may repeat itself with other banks, as frightened depositors and investors may begin to urgently withdraw their funds from bank accounts. Thus, the shares of First Republic Bank, located in San Francisco, and Signature Bank in New York fell by more than 20% in one day.
Recall that Silicon Valley Bank, established in 1983, specialized in lending to high-tech companies in Silicon Valley, financing private investment funds investing in high technology, and organizations conducting venture business. SVB was the 16th largest bank in the US.
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Posted by badanov 2023-03-12 00:00||
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