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Silicon Valley Bank Crisis: Another big banking crisis is being seen in America. The US regulator has ordered the closure of one of the major banks, Silicon Valley Bank. According to a CNBC report, the California Department of Financial Protection and Innovation has ordered the closure of this bank.
Along with this, the Federal Deposit Insurance Corporation has been made the receiver of the bank. It has also been given the responsibility of keeping the money of the customers safe. In view of this, the Federal Deposit Insurance Corporation has also constituted a team. Here in India, as soon as this news came out, the concern of Indian investors and founders of SaaS companies has increased.
The bank has assets of $ 209 billion
Silicon Valley is the 16th largest bank in America. Such a big bank has closed after the 2008 financial crisis and it has shocked the tech industry. The bank had assets of $209 billion and deposits of $175.4 billion. This bank used to provide financial support to new-age tech companies and companies investing in venture capital. It was not clear how far SVB deposits exceeded the $250,000 limit at this time.
Federal Reserve interest rate effect
The increase in interest rates by the Federal Reserve over the past 18 months has reduced investor interest in tech companies. Also, a risk has arisen for investors. Silicon Valley Bank was exposed to the technology industry, due to which its banking has been affected badly. On the other hand, the rest of the banks have enough capital to avoid this.
Big fall in shares
Shares of SVB Financial Group, the parent company of Silicon Valley Bank, plunged nearly 70 percent before the close of trading.
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