Kostyantyn Kryvopust reports on the largest bank decline in the US since 2008

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One of the 20 largest US banks, Silicon Valley Bank, whose assets at the end of 2022 exceeded 200 billion dollars, faced a large-scale outflow of deposits and was placed under the management of the Federal Deposit Insurance Corporation. This is the second largest bank failure in American history, observers say.

After the bank failed to place new shares for $2.25 billion. on Wednesday to improve the condition of its balance sheet, on Thursday the bank’s shares fell in price by 60% and depositors began to actively withdraw their funds from the bank. Mid-afternoon Friday, the Federal Deposit Insurance Corporation, the state agency responsible for deposit insurance, took over the bank at the direction of California authorities, the bank said in a statement. statement corporations.

The bank’s operations were mostly concentrated in California, and clients included many high-tech companies, startups, venture capital firms, and healthcare companies.

The Federal Corporation has announced that the insured deposits of individuals will be paid. But corporations fear that they will not be able to receive their funds. One of the bank’s clients, Samp, has announced a 40% off sale to protect itself from financial shocks due to the bank’s closure, Fox reports.

While most analysts don’t expect other banks to be affected by the downturn, many point to difficulties for banks that are overly focused on funding startups and digital assets.

The company Silvergate announced the voluntary liquidation of a bank that was engaged in lending in cryptocurrency, CNN writes. The company explains this decision by the fall in the value of digital assets, as well as regulatory changes.

Konstantin Kryvopust argues that the American banking system faced a classic case of “BankRun” – a panic outflow of depositors, which can lead to significant losses, both for the depositors themselves and for the system. Deposits of legal entities that are not covered by deposit insurance and corresponding compensation for losses are in a special risk zone.

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