The collapse of the Silicon Valley Bank, a key lender to US startups since the 1980s, has sent shockwaves in global markets. It is not only the largest bank failure since 2008, but also the second-largest failure ever for a retail bank in the United States.
Nearly $175 billion of the bank’s customer deposits are now under the control of the Federal Deposit Insurance Corporation, or FDIC, which has assured the depositors full access to their insured deposits after all the branches of the bank open on Monday morning. The financial body also said that cheques of the old bank would also be honoured.
Silicon Valley Bank is small by comparison with the nation’s largest banks — its $209 billion in assets pales next to the more than $3 trillion at JPMorgan Chase. But bank runs can happen when customers or investors panic and start pulling their deposits. Perhaps the most immediate concern late this week was that the failure of Silicon Valley Bank would scare off customers of other banks.
Shares of First Republic Bank, based in San Francisco, and Signature Bank in New York were down more than 20% on Friday. But shares of some of the nation’s largest banks including JPMorgan, Wells Fargo and Citigroup, nudged higher on Friday after a slump on Thursday.