America is witnessing another major banking crisis. The US regulator has ordered the closure of Silicon Valley Bank, one of the largest banks
Photo Social Media
Engagement: 0
Washington: America is witnessing another major banking crisis. The US regulator has ordered the closure of Silicon Valley Bank, one of the largest banks. According to a CNBC report, the California Department of Financial Protection and Innovation has ordered the bank to close.
In addition, the Federal Deposit Insurance Corporation has been made receiver of the bank. It is also entrusted with the responsibility of keeping customers’ money safe. In view of this, the Federal Deposit Insurance Corporation has also constituted a team. Here in India, as soon as the news broke, Indian investors and company founders became increasingly concerned.
Silicon Valley is the 16th largest bank in the United States. Such a large bank has closed since the 2008 financial crisis and it has shocked the tech industry. The bank had assets of $209 billion and deposits of $175.4 billion. The bank used to provide financial support to new-age tech companies and companies investing in venture capital. It was not clear to what extent SVB’s reserves exceeded the $250,000 limit at the time.
Interest rate hikes by the Federal Reserve over the past 18 months have dampened investor interest in tech companies. Apart from this, a risk has arisen for investors. Silicon Valley Bank was exposed to the technology industry, which has adversely affected its banking. On the other hand, the rest of the banks have enough capital to avoid this. Shares of Silicon Valley Bank’s parent company, SVB Financial Group, fell nearly 70 percent before the end of trading.
