Financial regulators in the United States announced on Friday the closure of Silicon Valley Bank due to lack of liquidity and ordered measures to also guarantee the protection of all its insured deposits.
The US bank Silicon Valley Bank , under the control of the US authorities since this Friday due to “insolvency”, is an institution closely linked to the field of technology hit by the decline of that sector.
The California Department of Financial Protection and Innovation (DFPI) closed the SVB , based in that state, and named the Federal Deposit Insurance Corporation (FDIC) as the depository of the bank’s funds, the federal agency reported on Friday.
The DFPI “took possession of Silicon Valley Bank , citing inadequate liquidity and insolvency,” the Californian agency noted.
What is BLS?
Silicon Valley Bank ( SVB ) is a Californian bank specializing in the technology sector, doing business primarily with funds that invest in unlisted companies.
Little known to the public, it is the 16th largest US bank by the size of its assets.
The firm, with operations in the United States, Europe, Asia and Israel, offered financial services to startups, among others, from simple bank accounts to advice to capitalize.
What was the troubled bank looking for?
The parent of this bank, SVB Financial Group, announced on Wednesday that it would try to raise 2.25 billion dollars in fresh funds
The group quickly sold a portfolio of 21 billion dollars of financial titles, with an estimated loss of 1,800 million.
SVB was seeking to strengthen its finances, weakened by customer withdrawals, until the announcement from federal and state authorities came this Friday.
According to The Wall Street Journal , citing sources close to the banking sector, investment funds advised companies to withdraw their money from SVB and, in reaction, the bank’s CEO on Thursday urged his clients “not to withdraw their deposits and not sow fear or panic”.
On Friday morning, the listing of SVB shares was suspended on the New York Stock Exchange pending a communication from the company, after a 60% drop in its titles on Thursday and a decline of more than 60% again in electronic exchanges prior to the opening.
According to the CNBC economic channel , the bank was unable to obtain the necessary capital and was negotiating its sale to another bank.
The bank’s 17 branches will reopen Monday under the control of a new entity specifically created by the FDIC to manage the institution’s operations.