The US government announced that individuals and companies who had their money deposited in the failed Silicon Valley Bank (SVB) will be able to access it again from today. Easier access for banks to loans in times of crisis is also enabled.
US Treasury Department, Fed reserves and Federal agency for deposit insurance (FDIC) they are announced in a statement that all savers will be fully protected and that no taxpayer will bear the consequences of the bank’s collapse, reports the BBC. “The U.S. banking system remains stable and on solid footing, in large part because of the reforms that they are were introduced after the financial crisis and which provide greater security for the banking industry,” they are announced in a joint statement. “Reforms along with today’s actions they are proof of our commitment to take the necessary steps for ensuring the safety of savers’ savings.”
California regulators they are SVB Financial, which had 6,000 employees, closed on Friday due to insufficient liquidity and insolvency, but as the bank was a key lender to the technology industry, it sparked unrest among many tech startups. As we reported, the bank due to losses that they are were largely due to overexposure to US Treasuries (ie they are bought at high prices in a period of low interest rates) wanted to recapitalize with 2.25 billion dollars. It was a shot in the knee as the news triggered an unsuspected panic.
Regulators they are closed also Signature Bank of New York, which is after SVB– applied to them for the most vulnerable institution.
The federal government said it would guarantee for all deposits in both banks, also those over $250,000. A federal agency for deposit insurance (FDIC) guarantees only for deposits up to $250,000. According to the data FDIC– and as of the end of 2022, approximately 89 percent of deposits in Silicon Valley Bank.
“SVB she knew the business community,” it is for Stanford University professor and founder of several startups told AFP Joseph DeSimone. “Helped they are they gave us when hiring people, when providing guarantees they are financial advice to new executives… So their demise is a real loss,” he said. It goes for the biggest failure of any American bank since the Bank of Washington Mutual September 2008.
Easier access to loans in times of crisis
To maintain trust, they are regulatory authorities revealed also a new way for banks to access emergency funds. Federal reserves they are announced that they will be part of the new program for bank financing (Bank Term Funding Program) made it easier for banks to access loans in times of crisis. American president Joe Biden told the citizens that “let them trust the banks that their savings will be where they need to be”. At the same time, he said that he would punish the guilty for this “string”, and announced that he would have a meeting today about it and about the measures for protection of the historic economic recovery speech.
“Minister for finance and the director of the National Economic Council at the end of the week, according to my instructions, they diligently cooperated with the banking regulators in solving the problems in the banks Silicon Valley Bank and Signature Bank. I am pleased that they quickly reached a solution that protects American workers and small businesses and keeps our financial system safe. The solution also ensures that taxpayers’ money is not at risk,” Biden announced. “Americans and American businesses can trust that their bank deposits will be available when they need them. I am determined that they will be held accountable for fully responsible for this issue and that we will continue to strive for strengthening the supervision and regulation of major banks so that this does not happen to us again. Tomorrow morning I will be giving a speech on how we will maintain a resilient banking system to protect our historic economic recovery.” Biden announced Sunday night.
US Treasury Secretary Janet Yellen said on Sunday that they want to avoid spreading the consequences of the collapse SVB Financial to other financial institutions, but not with a possible state rehabilitation of the bank. “We want to prevent the problems that exist in one bank from causing an infection in others that they are healthy” she said in conversation for television CBS.
To prevent a repeat at some other bank, the Fed announced that it would offer banks loans of up to one year in exchange for US government bonds and mortgage-backed securities that have fallen in value. The banks that will take out the loans will get the original value of the debt from the Fed. As during the pandemic, the Treasury Department will provide $25 billion credit insurance to cover bank losses. This should help banks to get cash easily in case of need.
Investors they are you breathed a sigh of relief
Investors on Wall Street they are were immediately relieved because the government intervened. Futures contracts for Dow Jones they are rose late on Sunday for almost 300 points or 0.9 percent. Forward contracts for The S&P 500 and Nasdaq were higher for 1.3 percent. Stock markets they are fell on Thursday and Friday for more than three percent, since they are investors feared new bank failures and systemic risk for technology sector.
HSBC to the rescue
Because it has SVB subsidiary in Great Britain, is the British Prime Minister Rishi Sunak announced on Sunday that he and the finance minister would be together Jeremy Hunt spoke to the governor of the Bank of England in order to mitigate the consequences as much as possible for British companies. “Clearly this could have a significant impact on the UK tech start-up ecosystem,” warned the representative of the Coalition for digital economy (Codec) House of Hallas.
From London they are announced on Monday morning that HSBC for bought one pound Silicon Valley Bank UK (SVBUK), which means that the bank will not insolvent. The Bank of England said yes they are all roles in SVBUK– they are safe.
Baffin has closed the German branch SVB– yes
German state agency for financial control Baffin closed the German branch of a failed American bank Silicon Valley Bank (SVB). At the agency Baffin they are as a reason for bank closure Silicon Valley Bank Germany stated “existing risk regarding the fulfillment of obligations to creditors”. At this they are pointed out that the collapse of the bank had no wider effect on the German banking sector. “The squeeze of the German branches Silicon Valley Bank is not a threat to financial stability,” they are provided and added that a ban on sales and payments to the bank was issued. German branch SVB started operating in May 2018 and provided loans to companies. According to reports Baffin the bank did not collect deposits from customers in Germany, so the moratorium “has no consequences for deposit insurance in Germany”. The total value of the assets of the German branch SVB based in Frankfurt, according to the agency, at the end of 2022 it amounted to just under 789.2 million euros, according to DPA.
He rests similarly also French finance minister Bruno Le Maire. “I don’t see any risk of infection, so there is no need to issue a specific warning to local lenders,Le Maire said in an interview for television Franceinfoas summarized by the French news agency AFP.
According to the minister’s assessment they are Parisian banks and the financial system are solid and have a high level of liquidity that allows resilience to shocks. Moreover, unlike SVB, which focuses on cutting-edge technology companies, French lenders “are not exposed to a single sector” but they are very diversified, added Le Maire.
Bank shares fall
Shares of Credit Suisse, the second largest Swiss bank they are crashed today, because they are financial markets worried about European banks. In morning trading on the Swiss stock exchange, the value of the share fell for 14.3 percent to 2.139 francs, a new historical low. Shares of German Commerzbank they are lost 12 percent, Spanish Santander 7.4 percent, Dutch ING and 8.3 percent, according to AFP.
At the bank SVB he has an account and money also Trbovel company Chipolo
Director and founder Chipola Primož Zelenšek it is for Finance newspaper explained that they are opened the account in 2017, and at the end of last week they are had $250,000 on it, which is the limit up to which they are deposits secured and will also paid without any problems.“It won’t be a big problem for us, but it could be a big pain for companies that they are got investment and deposited the money at SVB,” it is for Finance said Zelenšek.