US authorities take control of SVB bank
Close to Tech circles, the American bank suddenly found itself in difficulty, causing a wave of panic on the markets.
US authorities announced on Friday that they had closed Silicon Valley Banka bank close to tech circles which suddenly found itself in difficulty, and having entrusted the control of deposits to the American agency responsible for guaranteeing them (FDIC). The latter plans to reopen the 17 branches of the bank on Monday, based in California and Massachusetts.
It plans to allow customers to withdraw up to $250,000 in the short term, the amount usually guaranteed by the FDIC. Those with more in their bank accounts, which is the vast majority of the bank’s customers, are advised to contact the branch. It was the California Office of Financial Protection and Innovation (DFPI) that officially took possession of the establishment, citing “its lack of liquidity and its insolvency“.
It has entrusted its management to the FDIC, which has created a specific entity for this purpose, which will manage the bank’s assets, withdrawals, outstanding loans, and so on. At the end of 2022, the bank had $209 billion in assets and about $175.4 billion in deposits, authorities said. Little known to the general public, it was still the 16th American bank by the size of assets.
Rising interest rates and a tech turmoil
Based in Santa Clara, Calif., Silicon Valley Bank had specialized in the technology sector, primarily doing business with clients with funds from venture capital or private equity firms. The latter facing their own difficulties between rising interest rates and the turmoil in tech, they have, in recent months, withdrawn a lot of money from their accounts.
To have enough liquidity, Silicon Valley Bank announced on Wednesday evening that it was seeking to raise capital quickly. In the process, it lost 60% on the New York Stock Exchange on Thursday and its title was suspended on Friday before the start of the session.