Silicon Valley Bank (SVB), one of the largest US banks, was shut down by regulators and its assets were seized by the Federal Deposit Insurance Corporation (FDIC). The bank primarily served clients in the tech industry, including tech workers, start-ups, and venture capital firms. Its closure was the largest bankruptcy of a US bank since the global financial crisis in 2008.
The FDIC established the Santa Clara National Deposit Insurance Bank to hold insured deposits from the SVB, which will continue to pay the checks. The headquarters and all SVB branches will resume operation on 13 March and insured depositors will have full access to their deposits by Monday morning at the latest. However, it’s unclear how the shutdown will affect large accounts or lines of credit for companies, as standard FDIC insurance provides coverage of up to $250,000 per depositor.
Amid the turmoil, Razer CEO Ming-Liang Tan suggested to Twitter that it consider buying SVB and turning it into a digital bank. The proposal caught the attention of Twitter CEO Elon Musk, who responded positively, saying he was open to the idea.
This potential acquisition could mark Twitter’s entry into the fintech space as the company looks for ways to expand its business. By acquiring SVB, Twitter could use its large user base and strong brand to establish itself as a key player in the digital banking industry. At the time of writing, there is no official confirmation or further information regarding this comment from the billionaire.
SVB specializes in financing start-ups and is the 16th largest bank in the United States by assets, with $209 billion in assets and approximately $175.4 billion in deposits. The bank’s problems were triggered by the withdrawal of clients, which forced the company to liquidate securities positions that had fallen in value due to increases in the Federal Reserve’s interest rates. Its sudden collapse has thrown markets into turmoil and insured depositors will receive upfront dividends and potential additional dividend payments as the FDIC tries to liquidate its assets, while the regulator gradually sells the assets of the SVB.
Source: Port Altele
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