America’s Silicon Valley Bank closed, depositors tried to withdraw $ 42 billion
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New Delhi : After the year 2008, once again there are chances of banking crisis in America. America’s bank regulators have ordered the closure of Silicon Valley Bank, one of the largest banks in the country. Along with this, it has decided to appoint the Federal Deposit Insurance Corporation (FDIC) as the receiver of the bank. The FDIC is responsible for protecting the deposits of customers in banks. There is also news that before the closure of Silicon Bank, investors also tried to withdraw about $ 42 billion.
$958 million balance as of March 9
According to media reports, on Thursday investors and depositors tried to withdraw about $42 billion from Silicon Valley Bank. The bank was ordered to be closed on Friday by California’s bank regulator, the Department of Financial Protection and Innovation. According to the order, at the close of business on March 9, Silicon Valley Bank had approximately $958 million in cash remaining. The order highlights the scale of bank operations faced by the lender, which was placed in receivership of government regulator Federal Deposit Insurance Corp. The scale of the withdrawal attempt from the investors was so huge that the bank ran out of cash.
The bank has total assets of $ 209 billion.
According to media reports, this is the second time in the last 25 years in the US that an FDIC insured bank has been shut down. Earlier, in October 2020, Almena State Bank was also ordered to be closed. According to the report, the headquarters and all branches of the Silicon Valley Bank will now reopen on March 13 and all insured depositors will have access to their deposits by Monday morning. According to the report, as of December 31, 2022, the total assets of Silicon Valley Bank were about $ 209 billion and the total deposits were about $ 175.4 billion.
why silcon valley bank closed
The increase in interest rates by the Federal Reserve over the past 18 months has reduced investor interest in tech companies. Also, a risk has arisen for investors. Silicon Valley Bank was exposed to the technology industry, due to which its banking has been affected badly. On the other hand, the rest of the banks have enough capital to avoid this. Shares of SVB Financial Group, the parent company of Silicon Valley Bank, plunged nearly 70 percent before the close of trading.
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