3.3 C
Monday, March 27, 2023

Silicon Valley Bank: US money house crisis shakes financial market

Must read

- Advertisement -

- Advertisement -

The procedure is reminiscent of the financial crisis: the US supervisory authorities are closing a financial institution that has gotten into trouble – the deposit insurance takes over the customer funds. The stock exchanges react nervously.

The US money house Silicon Valley Bank (SVB), which specializes in start-up financing, has been temporarily closed and placed under state control after a failed emergency capital increase. This was announced by the US deposit insurance company FDIC on Friday. To protect customers, all of the bank’s insured deposits have been transferred to a new special purpose entity. The SVB, founded in 1983, had seen huge withdrawals of funds in the past few days as a result of liquidity concerns.

- Advertisement -

The 17 branches of the bank should reopen on Monday and customers will then have access to this money again at the latest. According to the FDIC, SVB had $209 billion in assets under management and approximately $175.4 billion in deposits at the end of December. It is initially unclear how much of this will be covered by the deposit insurance. For amounts over the $250,000 insurance limit, a full refund is considered in doubt. This creates a great deal of uncertainty, especially for companies.

SVB shares were suspended from trading on Friday after a price slide due to the acute emergency. Other banks also came under considerable pressure on the stock exchange. The voluntary resolution of US crypto bank Silvergate Capital had already sent shockwaves through parts of the financial sector on Thursday. Silvergate had already warned in the wake of the bankruptcy of the crypto exchange FTX that it might have to stop trading. However, Silvergate announced that it would repay all customer deposits.

The problems of the US banks also caused uncertainty on the European stock exchanges and caused the prices of Deutsche Bank and Commerzbank to drop significantly at times. According to Harvard professor and former US Treasury Secretary Larry Summers, however, worries about the risk of infection are exaggerated. In the US financial broadcaster Bloomberg TV, Summers spoke of an “overreaction” – as long as the crisis at SVB is managed properly and customer funds are paid out, no systemic risks for the banking sector can be assumed.

Source: Stern

- Advertisement -

More articles


Please enter your comment!
Please enter your name here

- Advertisement -

Latest article