It was called as Silicon Valley Bank, but its demise has sent shockwaves around the globe.
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The first sizable victim of the deep financial fault line that has been formed since 2008 is the collapse of Silicon Valley Bank (SVBVB -3%)
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This is the second-largest default bank in American history. Once again, the bank closure demonstrated how ineffectively markets find prices and attribute risk and return.
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SVB ranked as the 16th biggest bank in the United States. Between 2019 and 2022, SVB's balance sheet expanded by 250%. With $209 billion in assets, more than half of which were invested in long-term securities.
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SVB obtained $42 billion in account withdrawals on March 8, The bank run was the result of increased cash burn with its startup customers as well as uncertainty about the bank's solvency position.
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SVB attempted to close the solvency gap with a combined stock offering of $2.25 billion after selling a $21 billion bond portfolio at a loss of $1.8 billion. At noon on Friday, March 9, FDIC closed the bank.
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From Californian winemakers to startups on the other side of the Atlantic, companies are looking for ways to handle their finances after their bank unexpectedly closed down Friday.
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Customers in the United States with less than $250,000 in their accounts can rely on FDIC protection. Officials are looking for a buyer for the bank.
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