US News Banking regulators shutter Silicon Valley Bank (SVB), collapse unnerves investors. This is the second biggest bank collapse since 2008

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March 10 (Reuters) - California banking regulators on Friday moved quickly to close startup-focused lender SVB Financial Group (SIVB.O), the largest bank failure since the financial crisis, a sudden collapse that prompted the global banking sector to shed billions in market value.

The regulator appointed the Federal Deposit Insurance Corporation (FDIC) as receiver, putting the tech-heavy lender into receivership and will dispose of its assets, according to a statement.

Silicon Valley Bank is the first FDIC-insured institution to fail this year, the FDIC said. The last FDIC-insured institution to close was Almena State Bank in Kansas, on October 23, 2020.

SVB is largest bank failure since 2008 financial crisis

Startup-focused lender SVB Financial Group became the largest bank to fail since the 2008 financial crisis on Friday, in a sudden collapse that roiled global markets, left billions of dollars belonging to companies and investors stranded.

www.reuters.com

 

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Not good news for tech startups. I have a feeling this is just the tip of the iceberg...

 

[tom_mai78101]

Not good news for tech startups. I have a feeling this is just the tip of the iceberg...

Not just tech startups, payroll processing companies which rely on SVB are affected, and tons of employees are out of pay.

 

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Etsy warns sellers of delay in processing payments due to Silicon Valley Bank collapse

One affected Etsy seller said the deposits delay would have a “catastrophic” effect on his business.

Etsy is warning sellers that the collapse of Silicon Valley Bank on Friday is causing delays in processing payments, according to an email from the company shared with NBC News.

The online do-it-yourself goods mega shop said it used SVB to facilitate disbursement to some sellers, and that it was working with other payment partners to issue deposits.

"We wanted to let you know that there is a delay with your deposit that was scheduled for today," the email from Etsy said.

"We know that you count on us to help run your business and we understand how important it is for you to receive your funds when you need them," the email continued. "Please know that our teams are working hard to resolve this issue and send you your funds as quickly as possible."

Etsy warns sellers of payments delays due to Silicon Valley Bank collapse

The tech platform said that only 0.5% of its active sellers experienced delayed payments due to the shutdown and that it has begun resolving the issues using a different processor.

www.nbcnews.com

 

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Roku says 26% of its cash reserves are stuck in Silicon Valley Bank

Roku has $487 million of cash and cash equivalents in uninsured deposits at failed Silicon Valley Bank, the streaming media company said in an filing on Friday with the Securities and Exchange Commission.

About 26% of Roku’s $1.9 billion in cash was deposited with SVB, which was placed into receivership by the Federal Deposit Insurance Corp. midday Friday.

Roku shares fell over 4% in extended trading on the news.

“At this time, the Company does not know to what extent the Company will be able to recover its cash on deposit at SVB,” Roku said in a press release.

Roku says 26% of its cash reserves are stuck in Silicon Valley Bank

Around $487 million of Roku's cash reserves are stuck at Silicon Valley Bank, the streaming media company said Friday.

www.cnbc.com

 

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Yellen: No federal bailout for collapsed Silicon Valley Bank

Treasury Secretary Janet Yellen said Sunday that the federal government would not bail out Silicon Valley Bank, but is working to help depositors who are concerned about their money.

The Federal Deposit Insurance Corporation insures deposits up to $250,000, but many of the companies and wealthy people who used the bank — known for its relationships with technology startups and venture capital — had more than that amount in their account. There are fears that some workers across the country won’t receive their paychecks.

No plan had been announced on Sunday afternoon with hours to go until Asian markets opened. There were widespread hopes that Silicon Valley Bank would be acquired, but it was unclear if a buyer would emerge.

Federal officials set a deadline of 2 p.m. for potential buyers to submit bids in a government auction for the bank, according to a person who familiar with the matter. The person requested anonymity to talk about private conversations. Bloomberg was first to report the auction.

US government moves to stop potential banking crisis

NEW YORK (AP) — The U.S. government took extraordinary steps Sunday to stop a potential banking crisis after the historic failure of Silicon Valley Bank, assuring all depositors at the failed institution that they could access all their money quickly, even as another major bank was shut down.

apnews.com

 

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Silicon Valley Bank employees received bonuses hours before government takeover

Silicon Valley Bank employees received their annual bonuses Friday just hours before regulators seized the failing bank, according to people with knowledge of the payments.

The Santa Clara, California-based bank has historically paid employee bonuses on the second Friday of March, said the people, who declined to be identified speaking about the awards. The payments were for work done in 2022 and had been in process days before the bank’s collapse, the sources said.

This year, bonus day happened to fall on SVB’s final day of independence. The institution, in the throes of a bank run triggered by panicked venture capital investors and startup founders, was seized by the Federal Deposit Insurance Corporation (FDIC) around midday Friday.

On Friday, SVB CEO Greg Becker addressed workers in a two-minute video in which he said that he no longer made decisions at the 40-year-old bank, according to the people.

Silicon Valley Bank employees received bonuses hours before government takeover

The SVB employee bonuses were for work done in 2022 and had been in process days before the company's collapse, sources said.

www.cnbc.com

 

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HSBC swoops in to rescue UK arm of Silicon Valley Bank


HSBC has swooped to buy the UK arm of collapsed US Silicon Valley Bank (SVB), bringing relief to UK tech firms who warned they could go bust without help.

Customers and businesses who had been unable to withdraw their money will now be able to access it as normal.

The government and the Bank of England led the talks and worked through the night to scramble together the deal, which involves no taxpayer money.

HSBC said it paid just £1 for the SVB's UK arm.

Silicon Valley Bank - which specialised in lending to technology companies - was shut down by US regulators on Friday in what was the largest failure of a US bank since 2008.

Its collapse sent shockwaves across the tech industry over the possible impact it could have on businesses, with some firms telling the BBC they could go bust if deposits were not secured.

HSBC swoops in to rescue UK arm of Silicon Valley Bank

The Bank of England and government worked all night to secure a deal involving no taxpayer money.

www.bbc.co.uk

 

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The Dominoes are starting to fall...

Regulators seize Signature Bank in third-largest US bank failure

Regulators seized New York regional bank Signature Bank (SBNY) two days after shutting down Silicon Valley Bank as overseers of the banking system try to restore calm before markets open Monday.

Signature becomes the third-largest bank to ever fail in the U.S., behind Silicon Valley Bank and Washington Mutual in 2008, if its assets haven't changed significantly since the end of 2022. Signature had $110 billion in assets as of Dec. 31, ranking 29th among U.S. banks. It had $88 billion in deposits as of that date, and approximately 89.7% were not insured by the Federal Deposit Insurance Corporation.

All of those deposit holders will get their money back, according to a joint statement from the Treasury Department Secretary Janet Yellen, Federal Reserve Chair Jerome Powell and FDIC Chair Martin Gruenberg, who cited a "systemic risk exemption" that is also being applied to all Silicon Valley Bank deposit holders. Shareholders and certain unsecured debt holders will not be protected, they added, and senior management had been removed.

Any losses to the FDIC's Deposit Insurance Fund to support depositors who exceeded the $250,000-protected limit, they added, "will be recovered by a special assessment on banks, as required by law." The FDIC maintains its insurance fund with regular contributions from banks. The government officials did not disclose how many deposits or assets Signature was left with at the time of its seizure.

Regulators seize Signature Bank in third-largest US bank failure

Signature Bank becomes the second regional bank to failure in two days as regulators seek to restore calm to the banking world before markets open.

www.yahoo.com

 

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Spoiler: US Banking Crisis: The Truth Behind The Disaster

Silicon Valley Bank, Signature Bank and Silvergate bank have all collapsed throwing up a warning signs that something horrible is happening in the economy. But what's the truth here? This is a story of incompetence, a changing economic environment and political lobbying.

 

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SVB collapse was driven by ‘the first Twitter-fueled bank run’

The massive amount of customer withdrawals that led to the collapse of Silicon Valley Bank had all the hallmarks of an old-fashioned bank run, but with a new twist befitting the primary industry the bank served: much of it unfolded online.

Customers withdrew $42 billion in a single day last week from Silicon Valley Bank, leaving the bank with $1 billion in negative cash balance, the company said in a regulatory filing. The staggering withdrawals unfolded at a speed enabled by digital banking and were likely fueled in part by viral panic spreading on social media platforms and, reportedly, in private chat groups.

On the other side of a screen, startup leaders raced to withdraw funds online – so many, in fact, that some told CNN the online system appeared to go down. Still, the end result was a modern race to withdraw funds, which House Financial Services Chair Patrick McHenry later described in a statement as ” the first Twitter-fueled bank run.”

“Even back in the ancient days, way before we had any form of modern communication, this stuff tended to be rumors that moved really fast. The reason it would happen is people would walk down the street and observe people standing outside of banks,” Andrew Metrick, Janet L. Yellen Professor of Finance and Management at the Yale School of Management, told CNN. “Now we don’t have that, but we have Twitter.”

https://www.cnn.com/2023/03/14/tech/viral-bank-run/index.html

 

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Credit Suisse sinks after top shareholder rules out support

ZURICH – Credit Suisse Group shares plunged and the cost of insuring its bonds against default were near a distressed level after the bank’s biggest shareholder ruled out any additional support.

Credit Suisse’s largest shareholder, Saudi National Bank, said it would not buy more shares in the Swiss bank on regulatory grounds.

“The answer is absolutely not, for many reasons outside the simplest reason, which is regulatory and statutory,” Saudi National Bank chairman Ammar Al Khudairy said in an interview with Bloomberg TV on Wednesday. That was in response to a question on whether the bank was open to further injections if there was another call for additional liquidity.

Credit Suisse shares dropped as much as 30 per cent, triggering a 6 per cent plus fall in the European banking index, while five-year credit default swops (CDS) for the flagship Swiss bank hit a new record high, highlighting increasing investor concerns. BNP Paribas sank nearly 10 per cent.

Credit Suisse sinks after top shareholder rules out support

This triggered a 6 per cent plus fall in the European banking index. Read more at straitstimes.com.

www.straitstimes.com

 

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Stocks tumble on Wall Street on renewed fears about banks

NEW YORK (AP) — Stocks are back to falling on Wall Street Wednesday as worries worsen about the strength of banks on both sides of the Atlantic.

The S&P 500 was 1.8% lower in afternoon trading, while markets in Europe fell more sharply as shares of Switzerland’s Credit Suisse tumbled to a record low. The Dow Jones Industrial Average was down 620 points, or 1.9%, at 31,539 as of 1:11 p.m. Eastern time after earlier being down as many as 725 points. The Nasdaq composite was 1.1% lower.

Credit Suisse has been fighting troubles for years, including losses it took from the 2021 collapse of investment firm Archegos Capital. Its shares in Switzerland sank more than 25% following reports that its top shareholder won’t pump more money into its investment.

Wall Street’s harsh spotlight has intensified across the banking industry recently on worries about what may crack next following the second- and third-largest bank failures in U.S. history over the last week. Stocks of U.S. banks tumbled again Wednesday after enjoying a brief, one-day respite on Tuesday.

Asian stocks fall after Wall St sinks on new bank fears

BEIJING (AP) — Asian stock markets tumbled Thursday after Wall Street sank as a plunge in Credit Suisse shares reignited worries about a possible bank crisis following the failure of two U.S.

apnews.com

 

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New Silicon Valley Bank CEO tells employees: 'We are open for business'

The new CEO of Silicon Valley Bank held an all-hands meeting on Wednesday and sought to reassure employees that the bank was not planning on closing its doors, according to two people who listened in on the call.

Tim Mayopoulous, who the Federal Deposit Insurance Corporation appointed as chief executive after it took control of the bank on Friday, told employees that the bank had resumed many of its usual business activities.

“We are open for business, making new loans, processing payments and offering all the solutions we’ve been known for,” Mayopoulus said, according to one person who was on the call.

The people who spoke with NBC News requested anonymity, citing a lack of clearance to speak publicly and concerns about professional repercussions.

New Silicon Valley Bank CEO tells employees: 'We are open for business'

The future of Silicon Valley Bank has remained in doubt since the FDIC shut it down on Friday. The bank reopened Monday, though it could still be acquired.

www.nbcnews.com

 

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Federal Reserve lent $300 billion in emergency funds to banks in the past week

WASHINGTON (AP) — Cash-short banks have borrowed about $300 billion from the Federal Reserve in the past week, the central bank announced Thursday.

Nearly half the money — $143 billion — went to holding companies for two major banks that failed over the past week, Silicon Valley Bank and Signature Bank, triggering widespread alarm in financial markets. The Fed did not identify the banks that received the other half of the funding or say how many of them did so.

The holding companies for the two failed banks were set up by the Federal Deposit Insurance Corporation, which has taken over both banks. The money they borrowed was used to pay their uninsured depositors, with bonds owned by both banks posted as collateral. The FDIC has guaranteed the repayment of the loans, the Fed said.

The figures provide a first glimpse of the scale of the Fed’s assistance to the financial sector after the two banks collapsed this past weekend.

Federal Reserve lent $300 billion in emergency funds to banks in the past week

Nearly half the money — $143 billion — went to holding companies for the two major banks that failed over the past week, Silicon Valley Bank and Signature Bank, triggering widespread alarm in financial markets.

www.pbs.org

 

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FDIC announces agreement to sell Signature Bank assets to New York Community Bancorp subsidiary

A subsidiary of New York Community Bancorp has entered into an agreement with U.S. regulators to purchase deposits and loans from New York-based Signature Bank, which was closed a week ago.

The Federal Deposit Insurance Corporation said the deal would see the subsidiary, Flagstar Bank, assume substantially all of Signature Bank’s deposits, some of its loan portfolios and all 40 of its former branches. Roughly $60 billion of Signature Bank’s loans and $4 billion of its deposits would remain with it in receivership, the agency said.

The Sunday announcement addresses one of two failed banks the FDIC is holding under receivership.

The statement did not refer to the other, Silicon Valley Bank, a much larger bank that regulators took over two days before Signature.

FDIC announces agreement to sell Signature Bank assets to New York Community Bancorp subsidiary

Flagstar Bank, the subsidiary, will assume substantially all deposits and certain loan portfolios, and all 40 of Signature Bank's former branches.

www.cnbc.com

 

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UBS buys Credit Suisse for $3.2 billion as regulators look to shore up the global banking system

UBS agreed to buy its embattled rival Credit Suisse for 3 billion Swiss francs ($3.2 billion) Sunday, with Swiss regulators playing a key part in the deal as governments looked to stem a contagion threatening the global banking system.

“With the takeover of Credit Suisse by UBS, a solution has been found to secure financial stability and protect the Swiss economy in this exceptional situation,” read a statement from the Swiss National Bank, which noted the central bank worked with the Swiss government and the Swiss Financial Market Supervisory Authority to bring about the combination of the country’s two largest banks.

The terms of the deal will see Credit Suisse shareholders receive 1 UBS share for every 22.48 Credit Suisse shares they hold.

“This acquisition is attractive for UBS shareholders but, let us be clear, as far as Credit Suisse is concerned, this is an emergency rescue. We have structured a transaction which will preserve the value left in the business while limiting our downside exposure,” said UBS Chairman Colm Kelleher in a statement.

UBS buys Credit Suisse for $3.2 billion as regulators look to shore up the global banking system

The $3.2 billion rescue deal came after a weekend of crunch talks, with the chairman of UBS describing it as "absolutely essential to ... global finance."

www.cnbc.com

 

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Much of failed Silicon Valley Bank's assets to be sold to First Citizens, FDIC says

Seventeen SVB branches will open as First Citizens Bank branches on Monday.

First Citizens Bank will buy about $72 billion in assets from the failed Silicon Valley Bank, the Federal Deposit Insurance Corporation said.

Silicon Valley Bank, a regional lender with about $210 billion in assets, collapsed earlier this month. The bank had been the 16th largest bank in the country.

"Today's transaction included the purchase of about $72 billion of Silicon Valley Bridge Bank, National Association's assets at a discount of $16.5 billion," FDIC officials said in a press release.

Much of failed Silicon Valley Bank's assets to be sold to First Citizens, FDIC says

First Citizens Bank will buy about $72 billion in assets from the failed Silicon Valley Bank, the Federal Deposit Insurance Corporation said.

abcnews.go.com