On Friday, the US authorities closed the “Silicon Valley Bank” and imposed control on it until it reopened on Monday under a new name, following the inability of the Californian financial institution to meet the huge withdrawals of its customers. And what is the largest US bank failure since the financial crisis of 2008 and the second largest failure of a retail bank in the United States caused concern among customers, questions about the consequences and a wave of panic in global markets.
Led The crisis that hit the bank Silicon Valley Bank (SVB), which the US authorities decided on Friday to close, triggered a wave of slight panic across the sector, amid questions in the markets about the consequences of the largest US bank failure since the 2008 financial crisis.
The bank was not able to meet the huge withdrawals made by its customers, who are especially active in the field of technology, and its attempts to increase capital quickly did not succeed.
After closing the Californian bank, the US Deposit Insurance Agency imposed its oversight on the institution, which is expected to reopen Monday under a new name.
US Treasury calls for sector regulators
And the cryptocurrency “USDC”, which is described as “stable” because it is theoretically linked to the dollar, confirmed that it was shaken Friday night, Saturday, after the company that invented it, “Circle”, announced that it had deposited 3.3 billion dollars in the bankrupt bank.
Circle revealed that it was unable to withdraw all of its deposits with this bank. And she explained in a tweet on Twitter that $ 3.3 billion of her assets are still in the “SVB” vaults and cannot be withdrawn at present. The agency does not guarantee deposits exceeding $250,000 per client in each bank.
For her part, US Treasury Secretary Janet Yellen summoned a number of financial sector regulators on Friday to discuss the situation, and assured them that she had “full confidence” in their ability to take appropriate measures and believed that the banking sector remained “resilient”.
Silicon Valley customers worried
Silicon Valley Bank was not well known to a wide audience, as it specialized in financing startups and became the 16th US bank in terms of assets. At the end of 2022, he had assets of $209 billion and deposits of $175.4 billion.
Its demise not only marks the biggest bank failure since the failure of “Washington Mutual” in 2008, but also the second largest retail bank failure in the United States.
Outside the bank’s headquarters in Santa Clara on Friday, a few anxious customers were asking how they could access their money, and some tried to speculate on what was going on behind closed glass doors. On the storefront, the US Deposit Insurance Agency wrote on a piece of paper that as of Monday, up to $250,000 can be withdrawn.
One customer said: “This is not a good thing and some of the biggest (venture capital) companies have very large deposits here.” The head of this startup, who uses the bank to pay his employees, is worried about them.
Panic in global financial markets
In the markets, a state of panic began on Thursday, with the announcement of “SVB” that it was seeking to increase capital quickly to keep pace with the huge withdrawals from its customers, without success, after it sold $21 billion worth of securities and lost $1.8 billion.
The announcement surprised investors and revived concerns about the health of the banking sector as a whole, especially with the rapid rise in interest rates, which led to a decline in the value of bonds in their portfolios and raised the cost of credit. The four largest US banks lost $52 billion in the stock market on Thursday, and then Asian and European banks faltered.
In Paris, Societe Generale lost 4.49 percent, BNP Paribas 3.82 percent and Credit Agricole 2.48 percent. Elsewhere in Europe, Germany’s Deutsche Bank lost 7.35 percent, Britain’s Barclays lost 4.09 percent and Swiss UBS lost 4.53 percent.
And on Wall Street, the major banks recorded an improvement Friday, after collapsing the previous day. JPMorgan Chase advanced 2.54 percent, while Bank of America and Citigroup lost less than 1 percent.