Silicon Valley Bank closed, regional bank stock trading halted
Important takeaways
- Silicon Valley Bank was shut down by the California Department of Financial Protection.
- Trading for several regional banks – including crypto-friendly Signature Bank – was halted after shares experienced severe volatility.
- Silicon Valley Bank announced on Wednesday that it had taken extraordinary steps to strengthen its finances.
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Silicon Valley Bank, the 18th largest bank in the US by total assets, was shut down by regulators today after it was hit by a bank run.
Biggest bank failure since the Great Recession
The banking sector gets a crack.
Early Friday, the California Department of Financial Protection and Innovation announced the closure of Silicon Valley Bank. All FDIC-insured deposits were transferred from SVB to Deposit Insurance National Bank of Santa Clara. The FDIC indicated that all insured depositors would have full access to their insured deposits by March 13, while uninsured depositors would receive certificates for the amounts of their uninsured funds.
Trading in several regional bank stocks — including SVB, Signature Bank, First Republic Bank, PacWest Bancorp and Western Alliance Bancorp — had already been halted following news of Silicon Valley Bank’s liquidity problems.
At the time of writing, SVB was down 67% weekly, Signature Bank 27%, First Republic 30%, PacWest Bancorp 37% and Western Alliance 29%.
Silicon Valley Bank unexpectedly announced Wednesday that it is taking extraordinary and immediate steps to strengthen its finances. The bank revealed it had sold $21 billion of its most liquid assets, borrowed $15 billion and tried to raise money by organizing an emergency sale of its stock.
The news sparked a wave of withdrawals on Thursday as tech startups – which make up the overwhelming majority of the bank’s customers – sought to move their money to a safer place. In accordance CNBC, SVB Financial (Silicon Valley Bank’s parent company), having failed to raise sufficient capital to bolster its operations, then began seeking to sell itself. At the time of its closure, Silicon Valley Bank was the 18th largest bank in the United States by total assets.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH and several other crypto assets.
