The bank, which specializes in financing start-ups, has been controlled by the US authorities since Friday.
(Photo: IMAGO/UPI Photo)
new York US authorities are working flat out to find strategies to minimize the damage and the risk of contagion following the collapse of the Silicon Valley Bank (SVB). Two options in particular would be discussed, as reported by the US media.
On the one hand, the US deposit insurance FDIC could guarantee the entire deposits of the institute. On the other hand, the US Federal Reserve (Fed) could, in an additional step, also support other financial institutions that are directly affected by the bank’s bankruptcy. This was reported by the US stock exchange broadcaster CNBC.
Such a step could possibly also benefit the stablecoin provider Circle. Circle issues the stable-value token USDC, which is supposed to always have a value of one dollar. However, $3.3 billion from Circle’s more than $40 billion reserve was parked at SVB, the company said Friday night. As a result, USDC and other stablecoins lost their peg to the dollar. On Sunday afternoon (local time), however, the price had recovered significantly and was quoted at 97 cents.
The Silicon Valley Bank was the house bank of the tech industry and counted around 50 percent of US start-ups and well-known venture capitalists among its customers. Treasury Secretary Janet Yellen ruled out a government bailout for the bank on Sunday on CNBC television. However, she announced that she wanted to help customers.
Regulators apparently plan to give customers access to well over the $250,000 insured in the US on Monday. At the SVB, the number of customers who had significantly higher amounts in their accounts was particularly high.
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The bank’s assets were to be auctioned on Sunday afternoon, according to the Bloomberg news agency. However, it could take until late at night for the result to be announced. Regional banks such as PNC Financial, US Bank, Truist and Capital One could have the biggest chances, as reported by the news service “The Information”.
Wall Street watchers urged that a solution must be found before markets open on Monday. “One should not underestimate how important this is,” emphasized capital market expert Mohamed El-Erian, who advises Allianz, among others.
Several bidders interested in UK SVB arm
SVB’s UK arm, meanwhile, has attracted a number of prospects. The clearing bank The Bank of London has submitted an official bid. A consortium of investment companies led by the institute submitted an offer to the British authorities and the SVB, it said in a statement.
According to a media report, the major European-Asian bank HSBC has also expressed an interest in the British division. According to Sky News, America’s largest bank, JP Morgan Chase, is also said to be interested in the division.
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