Silicon Valley Bank’s closure is the largest US bank failure since 2008
Silicon Valley Bank's closure is the largest US bank failure since 2008
Silicon Valley Bank’s closure is the largest US bank failure since 2008
Silicon Valley Bank was closed by US authorities on Friday and forced to reopen under a new name on Monday, after it failed to meet customer withdrawal demands.
Silicon Valley Bank‘s closure is the largest US bank bankruptcy since the 2008 financial crisis and the second largest retail bank failure, creating panic and anxiety among customers worldwide.
The crisis at Silicon Valley Bank (SVB), which the US authorities decided to close on Friday, led to a wave of slight panic across the sector amid questions about the consequences.
Despite its efforts to increase capital quickly, the bank was unable to meet the withdrawals made by its technology customers.
US Deposit Insurance Agency oversight was imposed on the Californian bank after it closed, and it is expected to reopen Monday under a new name.
USA’s largest bank bankruptcy
Since Silicon Valley Bank specializes in financing startups, it wasn’t well known to the general public, even though it became the 16th largest US bank. 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.
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.
