In a sudden announcement it has been made known that Silicon Valley Bank (SVB) shares have plunged due to its recent financial woes, thus arousing fear in the sector of technological startups, not only in the United States, but also around the world. The collapse of the bank is listed as a possible indicator of the future crisis that is coming strong and fast in the financial sector.
It all started yesterday when the shares of SVB, a bank whose focus is on emerging technology and scientific companies, fell by 60%. However, this Friday things began to look worse, because the decrease in the stock market was approximately 68%.
The closure of the bank was ordered this friday march 10 by the Department of Financial Protection and Innovation of the state of California, announcing the closure through an official statement.
The fear of startups and investors in the sector
This is a heavy blow for him. technological sector in the United States, especially in California, which is considered the heart of the largest startups in the world and one of the main engines of the local economy. In the midst of this crisis, the regulators try to give certainty to the sector by stating that “all insured depositors will have full access to their insured deposits no later than Monday, March 13, 2023”, according to what is indicated by the Federal Deposit Insurance Corporation (FDIC)a public body that today controls Silicon Valley Bank.
This means that those who are not insured, that is, those who have more than $250,000 in your accounts (representing approximately 234,000 euros) will be able to receive an advance and a certificate indicating the remaining amount of their funds next week, but as the bank’s assets are sold they will be able to charge more, however this does not guarantee that they will recover the total amount in your accounts. At the moment the number of those affected is unknown, however as of December 2022 Silicon Valley Bank had about 209,000 million dollars in assets, which translates into 196,000 million euros.
One of the actions that has been taken to try to control the crisis is the creation of the Banco Nacional de Santa Clara, a banking institution that will be able to absorb the clients and accounts of SVB. “At the time of closing, the number of depositors who exceeded the insurance coverage limits was undetermined,” the statement said. However, this figure will be released as soon as the Santa Clara bank manages to obtain the information from the clients.
The first consequences of the collapse of the Silicon Valley Bank
The repercussions of this collapse have begun to show, and one of the first industries to show its impact is cryptocurrency. As is well known, this sector was already in a delicate state since the fall of Silvergate, but in the last few hours, the industry has been severely affected by the collapse of SVB. To this day, cryptos like ethereum have fallen by an estimated 9%, thus trading at 1,400 dollars, while bitcoin lost close to 9.5%. On the other hand, the currencies that have been affected the most by the phenomenon are Binancewhose drop is 7.3, Polygon (-9%) and Dogecoin (-11.8%).
Additionally, startups have begun to withdraw their funds from the bank with the aim of finding other lenders as soon as possible, thus avoiding being affected by the crisis.
Being one of the banks whose purpose is to finance companies in full growth stage, Its collapse has jeopardized the profitability and economic success of thousands of companies, causing a liquidity crisis and resulting in total losses.
Stay informed of the most relevant news on our Telegram channel