Regulators also moved to contain damage, closing another bank and opening an emergency lending program. HSBC agreed to buy the lender’s British subsidiary.SourceMoneyGuru-https://www.mgkx.com/3797.html
Here’s what you need to know about Silicon Valley Bank.
U.S. authorities, invoking rarely used regulatory authority, took action late Sunday to contain the damage from the collapse of Silicon Valley Bank, a once-obscure lender that focused on business customers, including start-ups throughout the tech sector.SourceMoneyGuru-https://www.mgkx.com/3797.html
Officials announced that depositors with money at the California bank, which was closed by state regulators on Friday, would be paid back in full and be able to start accessing their money on Monday morning. They also disclosed that a second bank had been shuttered by New York regulators and that its depositors would also be made whole.SourceMoneyGuru-https://www.mgkx.com/3797.html
The moves were meant to calm panicked bank investors and customers, some of whom have warned they might be unable to pay employees or contractors. The Fed also announced that it would set up an emergency lending program, with approval from the Treasury, to funnel funding to eligible banks and help ensure that they are able to “meet the needs of all their depositors.”SourceMoneyGuru-https://www.mgkx.com/3797.html
Here’s what you need to know:
- HSBC will buy the British subsidiary of Silicon Valley Bank, the Bank of England said in a statement. The outpost will continue to operate as normal, with British regulators saying that they “can confirm that all depositors’ money with SVBUK is safe and secure as a result of this transaction.” Prime Minister Rishi Sunak said on Sunday that the nation’s banking system was resilient and there was no threat posed by the collapse of the U.S. bank.
- The turmoil was reflected in choppy trading in markets around the world. U.S. stocks appeared poised to open flat after Silicon Valley Bank’s collapse last week capped the worst week for trading this year. The action by U.S. authorities to make depositors whole appeared to ease some concerns about potential contagion, although initial gains faded. Stocks in Europe dropped sharply in early trading, led by bank shares, with many indexes posting their biggest decline in months. Markets in Asia were mixed.
- The U.S. government held an auction over the weekend to try to sell off Silicon Valley Bank. But a Treasury official said Sunday that regulators ultimately decided to move forward with the plan to make depositors whole and not wait for a buyer because it was too challenging for a potential buyer to vet the bank’s books by Monday.
- Signature Bank, a New York financial institution with a big real estate lending business that had recently made a play to win cryptocurrency deposits, closed its doors abruptly on Sunday. Regulators said that keeping the bank open could threaten the stability of the entire financial system.