March was a tumultuous month for the US economic sector. And of course it’s not enough when the news about Silicon Valley Bank Bankruptcy laid the ground and technical industry in a difficult position and this portends bad omens.

Silicon Valley Bank is one of the banks America is the most powerfulTherefore, the report of the financial crisis protected the sector, the situation was so difficult that its regulators decided close the bank and designate an external body that will deal with everything related to its administration and the return of funds. The shock wave did not stay in the country’s economic cabinet, but began to be felt by technology startups and global markets.

Silicon Valley Bank (SVB)

What happened at Silicon Valley Bank shook the economic sector of the United States in a big way, and when we talk about SVB, we mean the bank of one financial strength within the US economic sector. More specifically, the bank, which had 29 branches in the United States and as many in India, the United Kingdom, Israel, Canada, China, Germany, Hong Kong, Ireland, Denmark and Sweden, was an essential link for the future of startups.

In that sense, the Silicon Valley bank was placed inside of the largest banks in the United States and the largest in Silicon Valley. His activity was focused on provide loans to companies in the technology sector and finance startups which were trying to break through, so the bankruptcy to which he was sentenced put the industry in a dangerous situation.

The Silicon Valley powerhouse had approximately $209 billion in total assets and $175.4 billion in deposits at the end of 2022, placing it in one of the biggest lenders from the United States.

The biggest bank failure since 2008

March 10 was marked in the financial market as a day when memories of the economic crisis of 2008 revived. Last Friday, the bank entered a situation of no return, which meant the biggest bank failure in recent years. The trigger came at a meeting of 40 finance chiefs from various tech groups who were discussing whether or not to keep their equity in the bank during a summit organized by the Silicon Valley bank itself.

The bank’s deposits increased to $124,000 million in March 2021, benefiting from the impact of the pandemic on the technology sector, capital that was invested in long-term bonds to get a higher yield. As inflation subsequently rose, these bonds began to decline, triggering remarkable events loss of interest and the subsequent decline in initial deposits.

Faced with such a scenario, the collapse was the last to reach the entity March 9 they realized it was missing 2.25 billion dollars to rebalance your balance. As a result, jitters flooded those who held their equity in the Silicon Valley bank, and the stock fell more than 62%.

The challenge was unexpected, and several companies in the technology industry began to withdraw their money and joined quite close 42,000 million dollarswhich further increases fear in the sector.

A call for calm

Due to the financial crisis situation, federal financial services regulators in the United States have taken action on this matter. So much so that the Janet Yellen-led Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIS) issued a statement yesterday Sunday ensuring that companies would have no problem getting to all their money Today is Monday.

In their letter, they said that “no loss associated with the Silicon Valley bank resolution will be passed on to taxpayers.” So much so that they developed a emergency plan backed by $25,000 million to resolve the situation and avoid a greater evil.

The intervention of the British bank HSBC

HSBC, the largest European bank, announced on Monday the rescue of Silicon Valley Bank, which bought the American bank for it a token amount of pounds (€1.13) in coordination with the British government. HSBC CEO Noel Quinn clarified that “this acquisition has a excellent strategic sense for our UK business. It strengthens our commercial banking franchise and enhances our ability to serve fast-growing and innovative companies, including the technology and life sciences sectors, both in the UK and internationally.