SVB, the go-to bank for US tech start-ups, faced a sudden bank run and collapsed on March 10, 2023.
The collapse of the Silicon Valley Bank (SVB) is said to be the biggest bank failure since the 2008 global financial crisis, also known as Washington Mutual. Here is a timeline of the bank’s downfall in just 48 hours
SVB sold bond assets approximately worth $21 Billion at a loss of $1.8 Billion, while also announcing that it was conducting a capital raise. Despite this, SVB witnessed a wave of withdrawals.
The SVB stock prices were in a downward spiral, plunging over 60%. Greg Becker, the CEO of SVB Financial Group, advised clients to stay calm amid concern about the bank’s financial position.
A regulatory filing at the end of the business day on March 9, 2023 showed that SVB had a negative cash balance of $958 Million.
The filing also said that depositors withdrew $42 Billion worth of deposits from SVB despite the bank being in sound financial condition prior to March 9th, causing a run on the bank.
Prominent venture capitalists advised businesses to withdraw their deposits from the Silicon Valley Bank. This came on a day when the SVB shares were halted from trading after a sharp sell-off in pre-market trading.
The Federal Deposit Insurance Corporation (FDIC) announced that SVB was closed on March 10, 2023 by the California Department of Protection and Innovation. The department has now appointed the FDIC as receiver.
The FDIC informed that all insured depositors will have access to their deposits until March 13, 2023. These insured deposits will have a cap of $250,000.
US Treasury Secretary Janet Yellen said that the treasury department is working to help the depositors concerned about their money. She also added that the Biden administration will not bail out the closed bank.
Industrialist Uday Kotak took to Twitter to share his thoughts on the SVB crisis, calling it an "accident" waiting to happen "somewhere".
President Joe Biden said that he ordered the Treasury Department and his economic advisers to address the failures of Silicon Valley Bank and Signature Bank. “I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again," Biden said in a statement Sunday.