{"id":178,"date":"2023-03-11T13:12:18","date_gmt":"2023-03-11T13:12:18","guid":{"rendered":"https:\/\/servpay.ng\/blog\/?p=178"},"modified":"2023-03-18T12:22:28","modified_gmt":"2023-03-18T12:22:28","slug":"silicon-valley-bank-collapses-biggest-banking-failure-in-us-since-2008","status":"publish","type":"post","link":"https:\/\/servpay.ng\/blog\/2023\/03\/11\/silicon-valley-bank-collapses-biggest-banking-failure-in-us-since-2008\/","title":{"rendered":"Silicon Valley Bank Collapses, Biggest Banking Failure in US since 2008"},"content":{"rendered":"\n
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Pictures from Bloomberg News<\/figcaption><\/figure>\n\n\n\n

Silicon Valley Bank <\/strong>(SVB) was a commercial bank with the headquarter in Santa Clara, California US.<\/p>\n\n\n\n

As of June 30, 2016, SVB had a 25.9 percent market share, making it one of the biggest banks in the country and the largest bank in Silicon Valley based on local deposits.<\/p>\n\n\n\n

Silicon Valley Bank provides financial assistance to startups, individuals, investors and international innovative companies to achieve their ambitious objectives. “SVB is the financial partner of the innovation economy”<\/em><\/p>\n\n\n\n

The second-largest bank failure in American financial history occurred on March 10, 2023, as a result of a bank run on SVB’s deposits, and the Federal Deposit Insurance Corporation was appointed as receiver.<\/p>\n\n\n\n\n\n\n\n

The Cause of Silicon Valley Bank’s Failure.<\/h2>\n\n\n\n

Since the year 2022, the US Federal Reserve has been raising interest rates from their historically low levels in an effort to combat inflation. Investors are less willing to take on risk since funds available to them cost more to access as a result of higher rates. Silicon Valley Bank’s main clients, technology startups, suffered as a result of their investors becoming less risk-tolerant.<\/p>\n\n\n\n

Some Silicon Valley Bank clients started taking money out to meet their liquidity needs as higher interest rates forced the market for initial public offerings to close down for many startups and made private fundraising more expensive. As a result, Silicon Valley Bank began to look for solutions to handle customer withdrawals.<\/p>\n\n\n\n

Silicon Valley Bank sold a $21 billion portfolio of bonds on 8th March 2023 to pay for the redemptions. The bonds were primarily US Treasury bonds. Averaging 1 point 79 percent, the portfolio’s yield was much lower than the current 10-year Treasury yield of about 3 point 9 percent. SVB was consequently compelled to record a $1.08 billion loss, which it had to make up for by raising capital.<\/p>\n\n\n\n

SVB announced on March 9, 2023, that it would sell $2.25 billion worth of common stock and preferred convertible stock to close its funding gap. Investors worried that the deposit withdrawals might force it to raise even more capital, which caused its shares to end the day’s trading down by 60%.<\/p>\n\n\n\n

On the recommendation of venture capital firms like Peter Thiel’s Founders Fund, some SVB clients ultimately withdrew their money from the bank, which led to the failure of the capital raising effort late on Thursday same day.<\/p>\n\n\n\n

SVB rushed on Friday 10th March 2023 to find additional funding, including by selling the business. But later that day, the Federal Deposit Insurance Corporation (FDIC) declared that SVB had been closed down and had been given over to its receivership. The FDIC added that it would try to sell SVB’s assets and that future dividend payments might be made to uninsured depositors.<\/p>\n\n\n\n

Meanwhile, Elon Musk has shown interest in buying Silicon Valley Bank after the collapse.<\/p>\n\n\n\n

<\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Silicon Valley Bank (SVB) was a commercial bank with the headquarter in Santa Clara, California US. As of June 30, 2016, SVB had a 25.9 percent market share, making it one of the biggest banks in the country and the largest bank in Silicon Valley based on local deposits. Silicon Valley Bank provides financial assistance … Continue reading Silicon Valley Bank Collapses, Biggest Banking Failure in US since 2008<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[36,65,34,21,64,66],"class_list":["post-178","post","type-post","status-publish","format-standard","hentry","category-finance","tag-cbn","tag-investors","tag-nigeria","tag-servpay-ng","tag-silicon-valley-bank","tag-startups"],"_links":{"self":[{"href":"https:\/\/servpay.ng\/blog\/wp-json\/wp\/v2\/posts\/178","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/servpay.ng\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/servpay.ng\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/servpay.ng\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/servpay.ng\/blog\/wp-json\/wp\/v2\/comments?post=178"}],"version-history":[{"count":2,"href":"https:\/\/servpay.ng\/blog\/wp-json\/wp\/v2\/posts\/178\/revisions"}],"predecessor-version":[{"id":213,"href":"https:\/\/servpay.ng\/blog\/wp-json\/wp\/v2\/posts\/178\/revisions\/213"}],"wp:attachment":[{"href":"https:\/\/servpay.ng\/blog\/wp-json\/wp\/v2\/media?parent=178"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/servpay.ng\/blog\/wp-json\/wp\/v2\/categories?post=178"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/servpay.ng\/blog\/wp-json\/wp\/v2\/tags?post=178"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}