(New York) The Silicon Valley Bank (SVB) was closed on Friday by US authorities, the largest bank failure in the United States since the 2008 financial crisis blowing a slight wind of panic on the markets.
The bank was no longer able to cope with the massive withdrawals of its customers, mainly tech players, and its last attempts to generate new money were unsuccessful.
The American authorities therefore took official possession of the bank and entrusted its management to the American agency responsible for guaranteeing deposits (FDIC).
US Treasury Secretary Janet Yellen called several financial sector regulators on Friday to discuss the situation, reminding them that she had “full confidence” in their ability to take appropriate action and believed that the banking sector remains ” resilient “.
Nervous customers
Little known to the general public, SVB had specialized in the financing of start-up and had become the 16e American bank by asset size: at the end of 2022, it had $209 billion in assets and approximately $175.4 billion in deposits.
In recent years, SVB has opened branches in Canada, including one in Montreal in 2021. The consequences of the American bankruptcy on the Canadian antennas remained unclear on Friday.
His demise not only represents the largest bank failure since Washington Mutual in 2008, but also the second-largest failure by a retail bank in the United States.
Outside the bank’s headquarters in Santa Clara on Friday, a few nervous customers wondered how they could access their funds, some trying to guess what was going on through the closed, glass doors.
On the storefront, a paper from the FDIC indicated that they could, starting Monday, withdraw up to $250,000.
” It’s not good. Many of the biggest [sociétés de capital-risque] have very high deposits here,” remarked a customer who did not want to give his name. boss of a start-uphe used the bank to pay his employees and is worried about them.
In the markets, the panic movement began on Thursday, after SVB announced that it was seeking to quickly raise capital to cope with the massive withdrawals of its customers, without succeeding, and having sold 21 billion dollars worth of securities. financiers, losing $1.8 billion in the process.
The announcement surprised investors and revived fears about the soundness of the banking sector as a whole, particularly with the rapid rise in interest rates which is lowering the value of the bonds in their portfolios and raising the cost of credit.
The four largest US banks lost $52 billion on the stock market on Thursday and in their wake, Asian and then European banks faltered.
On Wall Street, the big banks rallied on Friday after the rout the day before: JPMorgan Chase gained 2.54%, while Bank of America and Citigroup lost less than 1%.
Medium-sized or more concentrated banks on one type of customer were on the other hand more in turmoil, First Republic for example dropping nearly 15% and Signature Bank, close to the cryptocurrency community, 23%.
Guardrails
“As is often the case in finance, the problem did not come from where it was expected,” explains Alexander Yokum, from CFRA. Many observers wondered about the debt piling up on credit cards or the office real estate market. We did not expect a “bank run”, a chain reaction that begins with massive withdrawals of customers, he told AFP.
Stephen Innes, an analyst at SPI Asset Management, wants to be reassuring, deeming “low”, in a note, the risk “of a capital or liquidity incident among the big banks”.
Since the financial crisis of 2008 and the bankruptcy of the American bank Lehman Brothers, banks have had to give reinforced guarantees of solidity to their national and European regulators.
For example, they must demonstrate a higher minimum level of capital intended to absorb any losses.
For Morgan Stanley analysts, “the funding pressures facing the SVB are very particular”, and the other banks do not face a “liquidity shortage”.
With The Press