The Largest Bank Collapse Since 2008: Is There A Bank Crisis Coming?

온라인 슬롯 사이트

The financial authorities shut down the Silicon Valley Bank (SVB) today. This could mark the beginning of a banking crisis.

The Collapse Of Silicon Valley Bank

It was clear that the bank was facing serious issues as it saw its shares fall more than 60% in a matter of days. But what brought on the demise of the 18th largest bank in the US by total assets?
Several unfortunate circumstances and bad decisions made by Silicon Valley Bank’s parent company pawed the way to the fall of the bank. The bank was flooded with cash thanks to the well-performing startups. To make good use of that money the bank invested it in bonds to make as much profit as possible.

However, as its creditors started to face difficulties and inflation got out of hand, SVB had to return the money. The rush of the clients became even harder as the latest tax proposal of the Biden cabinet came out.

The company was in dire need of cash and they needed it at once. The leaders of SVB decided to sell several billions worth of assets within a few days time. The parent company and the bank raised a total of $2.25 billion.

Closing The Bank

Despite the massive amount of cash the institute managed to raise, it still couldn’t make good on all its liabilities. As the bank publicly collapsed the California Department of Financial Protection and Innovation . The department announced the closing of the institute today. It has also appointed the Federal Deposit Insurance Corporation (FDIC) as the receiver.

The FDIC created a new financial entity to oversee the deposits held by the Silicon Valley Bank at the time of its closing. The Deposit Insurance National Bank of Santa Clara (DINB) will protect the “insured depositors”. They will be able to withdraw their deposits in full next Monday.

However, the DINB will also look out for the uninsured depositors as well. They will receive an advance dividend within the next week together with a certificate. The certificate will serve as proof for the remaining amount of money they are entitled for. These will be covered later on as the assets of the bank are sold.

Based on its reports the bank had approximately $209.0 billion in total assets as of December 31, 2022. The bank also had about $175.4 billion in total deposits.

How Will This Affect The Crypto Industry?

As Silicon Valley Bank was a prominent institute in the financial world its collapse will have a ripple effect on the entire economy. With several ties to the crypto industry as well, it is safe to say that several crypto companies will suffer the consequences. For some of them this might even mean the end of the road.

For now there is little information available as to the extent of the damage caused by SVB’s fall. Firms will be quick to inform their customers if they were not involved with SVB, while others might keep a low profile about their ties with the fallen bank.

It has already come to light that Circle has held reserves at SVB. According to a report published by the U.S.-based stablecoin issuer, it has held an unknown percent of its $9.8 billion cash reserves at Silicon Valley Bank.

In the meantime Changpeng “CZ” Zhao assured his followers on Twitter that his company has no ties with the collapsed financial institute.

does not have exposure to SVB. Funds are .

— CZ 🔶 Binance (@cz_binance)

A Banking Crisis Is Around The Corner

The past few days have been hard on the banking sector. The stock prices of the financial institutes plummeted foreshadowing a possible crisis.

A potential banking crisis: -61% -60% -42% -38% -23% -17% -15% -15% -15% -15%

— TradingView (@tradingview)

The fall of SVB couldn’t have come at a worse time for the banking sector. Even though SVB is “small” compared to the giants of the financial world, bad news travels fast and far. The collapse could easily cause a bank run all over the country not to mention it keeping away potential customers. The sector is already in deep trouble with the issues caused by the increasing inflation. Getting bad press was the last thing they needed.