The collapse of Silicon Valley Bank is causing serious concern in the United States among customers, individuals and businesses (domestic and international). Upon the announcement of the bad news, the SVB found itself drowned in massive withdrawals of money, to the point that the deposit guarantee agency (FDIC) had to regain control. The American authorities announced on Sunday March 12 a series of measures to reassure customers about the solidity of the American banking system and will in particular guarantee the withdrawal of all deposits from SVB.
In addition to SVB, the American authorities will allow access to all the deposits of another establishment, Signature Bank, which has been closed automatically by the regulator, according to a press release. “I am firmly committed to holding accountable those responsible for this mess,” Joe Biden said in a statement, saying “the American people and American businesses can be confident that their bank deposits will be there when they need it. will need". The US president also said he would speak to the matter again on Monday morning: "I will comment on how we will maintain a resilient banking system to protect our historic economic recovery." »
The Federal Reserve (Fed) – the US central bank – has also agreed to lend the necessary funds to other banks that may need them to honor withdrawal requests from their customers. These measures were taken jointly by Treasury Secretary Janet Yellen, the Fed and the Deposit Guarantee Agency (FDIC), after consultation with US President Joe Biden, the statement said.
The wave of withdrawals that followed caused the failure of three banks this week, namely SVB, Signature Bank, but also Silvergate Bank, smaller but known for its privileged links with the cryptocurrency community. New York-based Signature Bank is the 21st largest U.S. bank, with assets estimated by the Fed at $110 billion at the end of 2022. Its default is the third-largest in U.S. history, behind SVB and Washington Mutual, in 2008. "Today, we are taking decisive action to protect the U.S. economy by strengthening confidence in our banking system," the Fed, Treasury, and FDIC said in their statement. "This initiative will allow the U.S. banking system to continue to play its vital role of protecting deposits and providing access to credit for households and businesses," they continued.
After the announcement of the SVB takeover by the FDIC on Friday, many had worried about the fate of deposits blocked by the establishment's failure. Some 96% of them were not covered by traditional deposit insurance, which insures up to $250,000 per customer per bank. “The banking system is much more resilient and on a much better footing than before the financial crisis,” a Treasury official said. "To be clear, the situation is not the same as in 2008." At the same time, the American authorities auctioned SVB with the objective of finding a buyer as soon as possible.
Democratic House Representative Josh Harder confirmed the auction to the Axios news site, saying the deadline for submitting bids, originally set for Sunday 6 p.m. GMT, could be postponed.
If the big banks have so far been spared, several American establishments of medium or regional size unscrewed on the stock market on Friday, fled by worried investors. This is particularly the case for the Californian First Republic, which dropped nearly 30% in two sessions, Thursday and Friday, or for Signature Bank, before it closed on Sunday.
In addition to the stability of the banking system, many expressed concern about the repercussions of the SVB bankruptcy on the technology sector, American but also beyond. SVB boasted that its clients were "almost half" tech and life sciences companies backed by U.S. investors.
SVB's deposits were around $170 billion, according to a document released Wednesday by the establishment, but colossal withdrawals have taken place since then. "A lot of depositors are small businesses that need to be able to access their funds to pay their bills and they employ tens of thousands of people" in the United States, Treasury Secretary Janet Yellen said on Sunday. CBS channel.
On Sunday, UK Finance Minister Jeremy Hunt said the fall of SVB posed a "serious risk" to his country's tech sector. Janet Yellen ruled out a bailout of SVB on Sunday via an injection of public money.
The solution announced on Sunday protects depositors but will not prevent the bank's shareholders from losing all of their investments.
