SVB was a major lender in the US start-up scene, as the only publicly traded bank focused on Silicon Valley and new tech ventures.
in the face of a funding crunch, investors were left to wonder if its plight was a harbinger of broader trouble.
Its website lists Shopify, VC firm Andreessen Horowitz and cybersecurity firm CrowdStrike Holdings among its clients. On Mar 8, its parent company, SVB Financial Group, announced it had sold US$21 billion of securities from its portfolio at a loss of US$1.8 billion and would sell US$2.25 billion in new shares to shore up its finances.
Receivership typically means a bank’s deposits will be assumed by another healthy bank, or the FDIC will pay depositors up to the insured limit.The FDIC said it had created a new bank, the Deposit Insurance National Bank of Santa Clara, to hold the assets of SVB. It added that insured depositors - those with US$250,000 or less in their accounts - wouldThe FDIC guarantees deposits - but typically only up to US$250,000 per client and per bank.
"We are taking decisive actions to protect the US economy by strengthening public confidence in our banking system," the agencies said in a joint statement. But those failed banks were considered systemically important because of their debt obligations to other banks; it’s not clear that SVB would get the same treatment.Several factors came together to cause its distress. Some of those are unique to SVB, while others are the source of broader worries in banking. Behind most of them are the rapid interest-rate increases pushed through over the last year by the US Federal Reserve to tame the highest inflation in decades.
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