The bankruptcy of Silicon Valley Bank (SVB), one of the leading banks in the United States, created a great panic in the financial markets. We have compiled all the details about the bankruptcy of Silicon Valley Bank for you.
Silicon Valley Bank, headquartered in California and founded in 1983, bank of start-up tech companies known as. Silicon Valley Bank (SVB) 16th largest bank. Let’s once again draw attention to how big this bank is by stating that there are more than 4000 banks in America.
After the SVB recently declared bankruptcy, experts said that the Silicon Valley Bank bankruptcy is the worst case scenario since the global financial crisis of 2008. second largest bank failure states that it is.
The main thing that makes Silicon Valley Bank important is its customers.
In the customer portfolio of SVB; There are venture capital funds that finance technology companies, healthcare companies, early-stage healthcare companies, biotechnology companies, early-stage technology companies and early-stage (start-up) companies. Most of the client portfolio start-up companies and providing funds to these companies venture capital funds forming.
Working with companies such as Circle, Roblox, Roku, Etsy, the importance of SVB for America, such as Apple and the like in the future able to make a big splash to include early stage (start-up) companies.
The total assets of the bank are almost one-third of Turkey’s national income!
The Bank’s total assets in the last quarter of 2022 212 billion dollars had stated. The total deposits deposited in the bank is 178 billion dollars.
Economist Ozgur Demirtas, In his broadcast about the bankruptcy of SVB recently, he said the following to draw attention to the magnitude of the bankruptcy: The total assets of SVB are 1/3 of Turkey’s national income!
Second largest bankruptcy in US history.
After the Washington Mutual Bank, which went bankrupt with its assets of 307 billion dollars in the global financial crisis in 2008, the bankruptcy of SVB with its assets of 209 billion dollars. second largest bank failure became history.
One of the reasons behind the bankruptcy is the rate hikes by the FED.
The increase in interest rates, which will be used for investments cost more money caused. Therefore, investors who will invest in technology companies with the cost of money. less willing to take risks There has been a decrease in investment in start-up companies.
Investors are reluctant to invest in new projects from both sides, considering the SVB’s client portfolio is mostly start-up companies and investors. It was detrimental to the SVB.
Companies that could not receive investments began to use their deposits for payments.
per quarter before rate hike 70 billion dollars Investments up to such amounts, together with the interest increase, 20 billion dollars had decreased to such amounts.
After this serious recession, companies with cash shortages started to use the money in their deposits, which SVB had deposits began to decline.
They made risky investments with 55.4% of their deposits!
SVB, which derives most of its income from risky financial investments, has more than half of its deposits. made risky investments and with the increase in interest rates, he also lost from his investments.
Looking for ways to meet the withdrawal demands of its customers, SVB has sold its bonds. decided to sell at a loss.
SVB shares plunged heavily after SVB announced it would sell approximately $2 billion worth of shares.
760 dollars SVB stock, which saw values such as $39 decreased to its value.
The inevitable end occurred when depositors attacked the bank.
Customers who want to save their deposits run to the bank with the advice of some mutual funds. “bank run” The so-called situation took place and the bank went bankrupt. Thereupon, the Federal Deposit Insurance Corporation (FDIC) seized the bank and trustee announced his appointment.
What will happen to depositors’ money?
According to US law, deposits up to $250,000 are covered. According to the statement made by the authorities, the deposits of all declared to be protected.
SVB’s UK partnership was acquired by HSBC.
SVB (UK), which operates a small banking business with approximately 3000 customers in the UK, is operated by HSBC. 1 poundwas purchased to.
Investors sued SVB’s CEO and CFO for fraud!
About a month before SVB went bankrupt, senior managers started selling shares known. from bankruptcy 2 weeks ago Greg Backer’s approach 3.5 million dollars It turned out to be worth the sale of shares.
The bankruptcy also has an impact on the crypto market!
One of SVB’s clients, Circle, is a very popular company in the cryptocurrency market. stablecoin He is known as the creator of USDC (a dollar-denominated coin).
Following the news of SVB’s bankruptcy, Circle also of $3.3 billion Upon learning that the cash is in the bank, USDC users panicked by withdrawing the value of USDC. $1 to $0.86 they caused it to fall.
In a statement made by Circle, USDC users damages will be covered announced.
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