The Silicon Valley Bank (SVB) was closed on Friday by the American authorities, causing a slight wind of panic on the financial markets. It is the largest bank failure in the United States since the 2008 financial crisis.
The bank was no longer able to cope with the massive withdrawals of its customers, mainly technology players, and its last attempts to raise fresh money were unsuccessful. The American authorities took official possession of the bank and entrusted its management to the American agency responsible for guaranteeing deposits (FDIC).
US Treasury Secretary Janet Yellen summoned several financial sector regulators on Friday to discuss the situation, reminding them that she had “full confidence” in their ability to take appropriate action. She said the banking sector remained ‘resilient’.
Nervous customers
Little known to the general public, SVB had specialized in financing start-ups. It had become the 16th largest US bank by asset size. At the end of 2022, it had $209 billion in assets and around $175.4 billion in deposits.
His disappearance not only represents the largest bank failure since that of Washington Mutual in 2008, but also the second largest failure of a retail bank in the United States.
Outside the bank’s headquarters in Santa Clara on Friday, a few nervous customers wondered how they might access their funds, some trying to guess what was going on through the closed, glass doors. On the storefront, a paper from the FDIC indicated that they might, from Monday, withdraw up to 250,000 dollars.
On the financial markets, the movement of panic began Thursday, following SVB announced that it was seeking to raise capital quickly to face the massive withdrawals of its customers, without success, and to have sold for 21 billion dollars of financial stocks, losing $1.8 billion in the process.
The announcement surprised investors and revived fears regarding the soundness of the banking sector as a whole, particularly with the rapid rise in interest rates which is lowering the value of the bonds in their portfolios and raising the cost of credit.
The four largest US banks lost $52 billion on the stock market on Thursday and in their wake, Asian and then European banks faltered.
/ATS
