Yahoo Finance SVB collapse - latest news: Silicon Valley Bank hit with lawsuit for misleading stockholders after failure
Two top executives at Silicon Valley Bank have been slapped with a class-action lawsuit over the company’s stunning collapse.
The lawsuit names CEO Greg Becker and CFO Daniel Beck, alleging they knowingly misled stockholders SVB’s ability to navigate risks.
It comes hours after President Joe Biden addressed the nation regarding the SVB collapse, as the US government takes steps to try to prevent an escalating financial crisis.
Mr Biden said that “no losses will be borne by the taxpayers. Instead, the money will come from the fees that banks pay into the Deposit Insurance Fund”.
“The management of these banks will be fired. If the bank is taken over by FDIC, the people running the bank should not work there anymore,” Mr Biden said.
The president said that “investors in the banks will not be protected”.
“They knowingly took a risk. And when the risk didn’t pay off, investors lose their money. That’s how capitalism works,” he added.
“I’m going to ask Congress and the banking regulators to strengthen the rules for banks, to make it less likely this kind of bank failure would happen again.”
Key Points
New York State Department of Financial Services takes over Signature Bank
Biden to ask Congress ‘to strengthen the rules for banks'
‘Investors in the banks will not be protected’
‘The management of these banks will be fired'
‘No losses borne by the taxpayers’
Biden says banking system is ‘safe’ and vows accountability for Silicon Valley Bank executives
03:45 , Oliver O'Connell
President Joe Biden reassured Americans that the nation’s banking system is safe after Silicon Valley Bank collapsed last week and said there would be accountability for financial executives.
The president’s actions come after the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation announced on Sunday evening that depositors for Silicon Valley Bank would have access to their money on Monday.
“No losses — and this is an important point — no losses will be borne by the taxpayers,” the president said. “Instead the money will come from the fees that banks pay into the deposit insurance fund.”
Eric Garcia reports from Washington, DC.
Biden says banking system is ‘safe’ after Silicon Valley Bank collapse
Voices: The Silicon Valley Bank collapse has made three things horrifically clear
01:45 , Oliver O'Connell
David Callaway writes:
Silicon Valley Bank is no Lehman Brothers moment.
Of that we were assured by regulators, banking executives and any number of media pundits over the weekend, who took pains to draw SVB’s collapse as an outlier. But as the shock waves spread around the world Sunday, from Wall Street and here in London to Asia, it became horrifically clear that an entire new and important asset class would now need to be protected – climate tech.
Read more:
The Silicon Valley Bank collapse has made three things horrifically clear
What you need to know about the Silicon Valley Bank collapse
00:45 , Oliver O'Connell
Two large banks that cater to the tech industry have collapsed after a bank run, government agencies are taking emergency measures to backstop the financial system, and President Joe Biden is reassuring Americans that the money they have in banks is safe.
It’s all eerily reminiscent of the financial meltdown that began with the bursting of the housing bubble 15 years ago. Yet the initial pace this time around seems even faster.
Over the last three days, the U.S. seized the two financial institutions after a bank run on Silicon Valley Bank, based in Santa Clara, California. It was the largest bank failure since Washington Mutual went under in 2008.
How did we get here? And will the steps the government unveiled over the weekend be enough?
Here are some questions and answers about what has happened and why it matters:
Silicon Valley Bank collapse: What you need to know
Over £50bn wiped off FTSE 100 amid banking stock sell-off
23:45 , Oliver O'Connell
More than £50 billion has been wiped off the UK’s biggest stock market on Monday after the second and third biggest bank failures in US history spooked investors across the globe.
The collapse of tech-focused Silicon Valley Bank sparked fears across Wall Street that the banking system was being crippled by a relentless cycle of interest rate rises.
Read more:
More than £50bn wiped off FTSE 100 amid banking stock sell-off
Premium: Silicon Valley rescue saves UK tech industry – but shares in other banks plummet
23:00 , Oliver O'Connell
Britain’s tech industry was saved from a crisis on Monday after HSBC rescued the UK arm of Silicon Valley Bank in a deal brokered by the government and the Bank of England.
Read more:
Silicon Valley rescue saves UK tech industry – but shares in other banks plummet
Start-ups, small businesses and online sellers despair at frozen funds
22:15 , Oliver O'Connell
It’s not just large tech firms and venture capital funds caught up in the collapse of Silicon Valley Bank. There are numerous small businesses, kitchen table start-ups and side-hustle online retailers impacted by the sudden bank failure.
They range from business owners unable to pay employees to Etsy sellers worried about paying bills as online payments stalled.
Many have taken to social media to vent their frustrations.
Online retailers despair in wake of Silicon Valley Bank collapse
Voices: The ghosts of the 2008 financial crisis loom over Biden’s response to Silicon Valley Bank
21:45 , Oliver O'Connell
Eric Garcia writes:
When President Joe Biden announced on Monday that people who had deposited their money in the now-unraveled Silicon Valley Bank would have their money available, he emphasised that American taxpayers would not be left on the hook.
Similarly, he added that the people responsible at the bank would need to be fired and that investors in Silicon Valley Bank would not be made whole, arguing that they took a risk and now have to suffer the losses.
On the surface, the Silicon Valley Bank collapse, as well as the closing of Signature Bank in New York, appears quite similar to the 2008 financial crisis that took banks like AIG to the brink and led to the collapse of Lehman Brothers. At the time, Mr Biden was a sitting senator running for vice president alongside Barack Obama. Both of them, as well as their White House opponent at the time, voted for the Troubled Assets Relief Program, or TARP, which became known as the “bailout” in the popular imagination.
But there are important distinctions between 2008 and today.
Read on:
Ghosts of the 2008 financial crisis loom over Biden’s response to Silicon Valley Bank
Shopify CEO: ‘Very minor impact for us'
21:30 , Oliver O'Connell
Tobi Lutke, CEO of e-commerce platform Shopify, shared an email sent out to merchants offering to help if their funds were frozen at Silicon Valley Bank and confirmed that the collapse of the bank had only had “very minor impact for us”.
Email we just sent to affected Shopify merchants pic.twitter.com/77MzG8F0bh
— tobi lutke (@tobi) March 12, 2023
Watch: Ro Khanna says stock sale money should be ‘clawed back’ for depositors
21:16 , Oliver O'Connell
Silicon Valley Bank CEO Gregory Becker sold $3.6 million of stock weeks before the bank collapsed. On Sunday, Democratic California Rep. Ro Khanna told @margbrennan that he thinks the “money should be clawed back,” and “given to the depositors.” pic.twitter.com/iGEBagXmOg
— Face The Nation (@FaceTheNation) March 13, 2023
Fed’s top regulator to lead review of supervision of SVB
21:05 , Oliver O'Connell
The Federal Reserve Board on Monday announced that Vice Chair for Supervision Michael S Barr is leading a review of the supervision and regulation of Silicon Valley Bank, in light of its failure. The review will be publicly released by 1 May.
“The events surrounding Silicon Valley Bank demand a thorough, transparent, and swift review by the Federal Reserve,” said Chair Jerome H. Powell.
“We need to have humility, and conduct a careful and thorough review of how we supervised and regulated this firm, and what we should learn from this experience,” said Vice Chair Barr.
Democrat lawmaker posts TikTok Silicon Valley Bank explainer
20:45 , Oliver O'Connell
Democratic Rep Jeff Jackson of North Carolina has posted a helpful explainer about the Silicon Valley Bank collapse to TikTok in which he lays out as clearly as possible what happened to the doomed bank, what the federal government is doing about it, and why it is important not to panic.
Watch below:
Warren: ‘We need stronger rules and stronger oversight of banks like SVB'
20:40 , Oliver O'Connell
We need stronger rules and stronger oversight for banks like SVB. And to deter this kind of risky behavior from happening again, those responsible for it must not be rewarded. SVB and Signature executives must be held accountable.
— Elizabeth Warren (@ewarren) March 13, 2023
FDIC planning another auction of Silicon Valley Bank
20:30 , Oliver O'Connell
Regulators are planning to take another crack at auctioning failed Silicon Valley Bank, according to people familiar with the matter, after they were unable to find a buyer for the firm over the weekend.
Officials from the Federal Deposit Insurance Corp told Senate Republicans on Monday that they had additional flexibility to sell the firm now that regulators had declared its failure a threat to the financial system, according to people familiar with the briefing and notes on the discussion reviewed by The Wall Street Journal.
Sliding bank shares drag Wall Street in choppy trade
20:25 , Oliver O'Connell
Sliding bank shared dragged Wall Street on Monday with investors worried about contagion from the Silicon Valley Bank collapse, but trade was choppy and some sectors benefited from hopes the Federal Reserve could ease up on interest rate hikes.
SVB Financial's sudden shutdown on Friday after a failed capital raise had investors worried about risks to other banks from the Fed's sharp rate hikes over the last year. But many speculated the central bank could now become less hawkish, and the yield on the 2-year Treasury tumbled.
Regulators over the weekend stepped in to restore investor confidence in the banking system, saying SVB's depositors will have access to their funds on Monday.
To some investors, the Fed's decision next week will also hinge on inflation data due this week.
"If we get shockingly bad Consumer Price Index and Producer Price Index, the Fed is going to find itself in a tough spot or a much tougher spot that it even finds itself in ahead of those prints," said Orion Advisor Solutions CIO Timothy Holland.
According to preliminary data, the S&P 500 lost 5.82 points, or 0.16%, to end at 3,855.54 points, while the Nasdaq Composite gained 49.74 points, or 0.45%, to 11,188.63. The Dow Jones Industrial Average fell 86.66 points, or 0.27%, to 31,822.08.
The benchmark S&P 500 is now up about 1% for the year so far. Earlier in the session it fell, briefly erasing all the year-to-date gains.
Reuters
SVB CEO and CFO hit with class action suit
20:05 , Oliver O'Connell
A class action suit has been filed against Silicon Valley Bank CEO Greg Becker and Chief Financial Officer Daniel Beck over the bank’s collapse.
Filed today in the Northern District of California, the suit claims that the company misled stockholders about the bank’s ability to deal with potential risks such as rising interest rates.
It claims both Mr Becker and Mr Beck “knew that the public documents and statements issued or disseminated in the name of the Company were materially false and misleading”.
Read the full filing here.
Thiel group withdrew all funds from Silicon Valley Bank before collapse, report says
19:45 , Oliver O'Connell
Peter Thiel’s Founders Fund withdrew all of its funds from Silicon Valley Bank before the bank collapsed, according to reporting by Bloomberg.
A source said that the fund — started by PayPal cofounder Thiel — began experiencing problems using the bank’s services and decided to close its exposure.
The group was in the midst of asking investment partners to send funds to invest in a company to its SVB account but they did not immediately go through as expected. They were instructed to send the funds to other banks instead.
Founders Fund was not alone in withdrawing money from SVB as other venture funds took steps to limit their exposure as the bank descended into chaos.
The source did not tell Bloomberg if the group’s cash withdrawals happened on Thursday when worries about the state of the bank really took off, or if this occurred prior to that.
Germany imposes moratorium on German SVB branch
19:15 , Oliver O'Connell
Germany’s financial regulator BaFin on Monday said it was imposing a moratorium on the German branch of Silicon Valley Bank in the wake of its demise and noted the branch has “no systemic relevance”.
The bank opened a small branch in 2018 after it won a license to lend.
BaFin said that the situation posed no “threat to financial stability”.
Bernie Sanders blames bank collapse on Trump
19:00 , Oliver O'Connell
Senator Bernie Sanders issued the following statement on the collapse of Silicon Valley Bank:
“Let’s be clear. The failure of Silicon Valley Bank is a direct result of an absurd 2018 bank deregulation bill signed by Donald Trump that I strongly opposed. Five years ago, the Republican Director of the Congressional Budget Office released a report finding that this legislation would ‘increase the likelihood that a large financial firm with assets of between $100 billion and $250 billion would fail’.
“Unfortunately, that is precisely what happened. During the debate over the legislation I said: ‘Are our memories so short that we learned nothing from the 2008 Wall Street crash? Have we learned nothing from the Savings and Loan disaster of the early 1990s or the thievery of Wells Fargo over the last couple of years or the dishonesty of Equifax or the accounting fraud at Enron and Arthur Anderson or the failure of Long-Term Capital Management or the billions of dollars in fines that financial institution after financial institution has paid out for illegal or deceptive activities?’ Sadly, the Republican Congress and the Trump Administration answered all of these questions with a resounding NO.
“Now is not the time for US taxpayers to bail out Silicon Valley Bank. If there is a bailout of Silicon Valley Bank, it must be 100 per cent financed by Wall Street and large financial institutions. We cannot continue down the road of more socialism for the rich and rugged individualism for everyone else. Let us have the courage to stand up to Wall Street, repeal the disastrous 2018 bank deregulation law, break up too-big-to-fail banks and address the needs of working families, not the risky bets of vulture capitalists.”
My statement on Silicon Valley Bank. pic.twitter.com/dwB8xdhCwm
— Bernie Sanders (@SenSanders) March 12, 2023
Haley attacks Biden’s ‘bailout’ of Silicon Valley Bank
18:30 , Oliver O'Connell
Republican presidential candidate and former US Ambassador to the UN Nikki Haley has called on President Joe Biden to be upfront with the American people about the “bailout” of Silicon Valley Bank.
In a statement, the former South Carolina governor said: “Joe Biden is pretending this isn’t a bailout. It is. Now depositors at healthy banks are forced to subsidise Silicon Valley Bank’s mismanagement. When the Deposit Insurance Fund runs dry, all bank customers are on the hook. That’s a public bailout.”
She adds: “Depositors should be paid by selling off Silicon Valley Bank’s assets, not by the public. Taxpayers should not be responsible.”
Joe Biden is pretending this isn't a bailout. It is.
Now depositors at healthy banks are forced to subsidize Silicon Valley Bank's mismanagement. When the Deposit Insurance Fund runs dry, all bank customers are on the hook. That’s a public bailout.
Depositors should be paid by… https://t.co/LDmCR9NOCd— Nikki Haley (@NikkiHaley) March 13, 2023
Timeline: Collapse of Silicon Valley Bank
18:15 , Oliver O'Connell
Visual Capitalist prepared this helpful timeline of the collapse of Silicon Valley Bank over a 10-day period since the end of February.
Timeline: The Shocking Collapse of Silicon Valley Bank 🏦 pic.twitter.com/YQnm2yCYaA
— Visual Capitalist (@VisualCap) March 13, 2023
Canadian regulator takes control of SVB’s Toronto branch
18:00 , Oliver O'Connell
Canada’s Superintendent of Financial Institutions has taken temporary control of the assets of the Canadian branch of Silicon Valley Bank, as well as issuing notice that he intends to seek permanent control of its assets and requesting that the Attorney General of Canada apply for a Winding-Up Order.
Silicon Valley Bank operates in Canada as a Foreign Bank Branch based in Toronto that is supervised by the Office of the Superintendent of Financial Institutions (OSFI). Its business in Canada is primarily lending to corporate clients. This branch does not hold any commercial or individual deposits in Canada.
Peter Routledge, Superintendent of Financial Institutions, said: “By taking temporary control of the Canadian branch of Silicon Valley Bank, we are acting to protect the rights and interests of the branch’s creditors. I want to be clear: the Silicon Valley Bank branch in Canada does not take deposits from Canadians, and this situation is the result of circumstances particular to Silicon Valley Bank in the United States.”
Congress enabled Silicon Valley Bank collapse, says Warren
17:45 , Oliver O'Connell
Senator Elizabeth Warren says that Congress enabled the collapse of Silicon Valley Bank. Writing in The New York Times on Monday, the longtime foe of Wall Street deregulation pointed the finger squarely at bank executives pressuring Congress to weaken the Dodd-Frank Act put in place after the 2008 financial crisis.
She writes:
Greg Becker, the chief executive of Silicon Valley Bank, was one of the many high-powered executives who lobbied Congress to weaken the law. In 2018, the big banks won. With support from both parties, President Donald Trump signed a law to roll back critical parts of Dodd-Frank. Regulators, including the Federal Reserve chair Jerome Powell, then made a bad situation worse, letting financial institutions load up on risk.
Banks like SVB — which had become the 16th largest bank in the country before regulators shut it down on Friday — got relief from stringent requirements, basing their claim on the laughable assertion that banks like them weren’t actually “big” and therefore didn’t need strong oversight.
Senator Warren says she warned about these risks in 2018 and wishes she had been wrong.
Voices: The Silicon Valley Bank collapse has made three things horrifically clear
17:30 , Oliver O'Connell
David Callaway writes:
Silicon Valley Bank is no Lehman Brothers moment.
Of that we were assured by regulators, banking executives and any number of media pundits over the weekend, who took pains to draw SVB’s collapse as an outlier. But as the shock waves spread around the world Sunday, from Wall Street and here in London to Asia, it became horrifically clear that an entire new and important asset class would now need to be protected – climate tech.
Read more:
The Silicon Valley Bank collapse has made three things horrifically clear
17:15 , Oliver O'Connell
Small businesses across the country that had accounts at Silicon Valley Bank and Signature Bank can breathe easier knowing they will be able to pay their workers.
It won't cost taxpayers a dime.
This is paid for with the fees that banks pay into the Deposit Insurance Fund. pic.twitter.com/1rv949k3X5— President Biden (@POTUS) March 13, 2023
Is this another Lehman Brothers moment?
17:00 , Oliver O'Connell
While the failure of two banks in three days has spooked investors and brought back memories of the collapse of Lehman Brothers in 2008, the two situations are, for now, quite different.
Lehman Brothers was brought down by having large holdings of subprime mortgage debt, something that was found on the balance sheet of every large bank, which was why the federal government needed to step in to prevent a complete collapse.
In the case of Silicon Valley Bank, its business is very focused on tech and venture capital firms as well as some other regional businesses in California. As the tech industry losses grew in recent months the bank got into increasing difficulty as its clients withdrew more and more money as borrowing became more expensive due to interest rate hikes.
SVB unloaded its holdings of Treasury bonds, which were also depressed, in an attempt to raise funds to cover the withdrawals. Having sold a $21bn portfolio at a loss of $1.8bn concerns grew about the bank’s stability and its clients rushed to pull their deposits.
Larger banks such as Citi, Bank of America, and JP Morgan have much more diverse businesses and so they have not seen a large proportion of their depositors attempting to withdraw their funds as SVB saw. There is no run on the banks.
What the SVB situation tells us is that Federal Reserve rate increases to tackle inflation have depressed the value of Treasury bonds which every major bank holds. Therefore it is likely, as Goldman Sachs has said, that the Fed will hold off on its next interest rate hikes.
Western Alliance Bank strengthening liquidity position as outflows are moderate
16:50 , Oliver O'Connell
Arizona-based Western Alliance Bank President and CEO Kenneth Vecchione issued a statement this morning about the health of the bank.
Western Alliance has taken additional steps to strengthen its liquidity position to ensure that we are in a position to meet all of our client funding needs, including increasing our borrowing capacity. As of this morning, cash reserves exceed $25 billion and are growing, while deposit outflows have been moderate. Including accounts eligible for pass-through insurance, insured deposits exceed 50% of total deposits.
We also welcome the banking agencies’ statement yesterday expressing their commitment to ensuring liquidity within the banking system, and their confidence in the strength of the banking industry.
Chinese start-ups scramble for alternatives to SVB
16:30 , Oliver O'Connell
Stunned by the sudden collapse of Silicon Valley Bank, the main go-to foreign bank for the majority of Chinese start-ups, entrepreneurs and venture funds are scrambling for alternatives despite US regulators averting a banking crisis by guaranteeing all deposits of the troubled bank.
Chinese start-ups and fund managers said they are still looking to move their money out of SVB once they can. Some of them are turning to bigger US banks, while a few Chinese lenders such as China Merchants Bank and the Industrial & Commercial Bank of China are also rushing to fill the gap.
Such banks have offered account services similar to those of SVB, but found it hard to crack the US bank’s dominance among early-stage start-ups in China, where SVB has operated for more than two decades and has a local joint venture.
As SVB was one of the few banks that made it easy for start-ups to open bank accounts for dollar financing, it was the dominant foreign bank of choice for young companies in China, advisors and companies said.
VIDEO: Silicon Valley Bank collapse: HSBC moves to buy SVB subsidiary in the UK
16:00 , The Independent
As Dow jumps 200 points, trading in regional bank stocks halted
15:45 , Oliver O'Connell
The Dow Jones Industrial Average jumped some 200 points on Monday morning as investors sought areas removed from the banking industry to park money during the current volatility.
At the same time, regional and specialised banks similar in size to Silicon Valley Bank and Signature Bank saw trading halted after circuit breakers were triggered to prevent a crash in their value.
Western Alliance, based in Arizona, was down 80 per cent on early trading; First Republic Bank dropped 75 per cent; both Comerica and East West Bancorp fell around 30 percent; and Zions Bancorp in Utah fell 20 per cent.
There were smaller drops in the value of larger financial institutions such as Citi, Wells Fargo, Bank of America, and JP Morgan Chase.
FTSE 100 suffers sharp fall as HSBC buys Silicon Valley Bank UK for £1
15:30 , Holly Williams
London’s FTSE 100 Index has tumbled further as banks remained in the red amid fallout from the collapse of Silicon Valley Bank despite emergency action in the US to protect customers and a rescue deal in the UK.
The top tier fell nearly 2% in morning trading on Monday, down 132.2 points at 7616.2, with banks and financial stocks extending share losses seen on Friday.
HSBC’s £1 deal to take over the UK arm of failed Silicon Valley Bank (SVB UK) did not halt the slide on the London market as fears over contagion mounted.
The US government took extraordinary steps to stop a potential banking crisis, moving to protect all depositor cash after last Friday’s collapse of California-based SVB.
Read more:
FTSE 100 suffers sharp fall as HSBC buys Silicon Valley Bank UK for £1
Biden says banking system is ‘safe’, vows accountability for executives
15:15 , Oliver O'Connell
President Joe Biden reassured Americans that the nation’s banking system is safe after Silicon Valley Bank collapsed last week and said there would be accountability for financial executives.
The president’s actions come after the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation announced on Sunday evening that depositors for Silicon Valley Bank would have access to their money on Monday.
“No losses, and this is an important point, no losses will be borne by the taxpayers,” the president said. “Instead the money will come from the fees that banks pay into the deposit insurance fund.”
Eric Garcia reports from Washington, DC.
Biden says banking system is ‘safe’ after Silicon Valley Bank collapse
What happened to Silicon Valley Bank?
15:00 , Rachel Sharp
On Friday, California regulators shut down Silicon Valley Bank (SVB) in what brought back memories of the dark days of the financial crash.
The bank’s collapse came just 48 hours after it announced it had sold off a load of securities at a loss and planned to sell $2.25bn in new shares to shore up its balance sheet.
This sparked a panic among depositors who rushed to withdraw their money, creating a run on the bank and sending shares plummeting.
In pre-market trading on Friday, share price fell a staggering 66 per cent.
Trading was halted and California regulators stepped in, shuttering the bank in the middle of the trading day and appointing the Federal Deposit Insurance Corporation (FDIC) as receiver.
It marked the biggest US bank collapse since Washington Mutual failed during the height of the 2008 financial crisis.
On Sunday, a second bank – New York-based Signature Bank – was then also shut down by regulators in a move to prevent an escalating crisis. Signature Bank is one of the biggest banks to the cryptocurrency industry.
California Rep Katie Porter says SVB collapse ‘totally avoidable'
14:45 , Oliver O'Connell
Rep Katie Porter of California’s 47th congressional district says the collapse of Silicon Valley Bank was totally avoidable and warned even before joining Congress that the 2018 deregulation bill allowed banks to take reckless risks.
The collapse of Silicon Valley Bank was totally avoidable.
In 2018, Wall Street pushed a deregulation bill that allowed banks like SVB to take reckless risks. It passed, even as I and many others warned of the risks.
I am writing legislation to reverse that law, S. 2155.— Rep. Katie Porter (@RepKatiePorter) March 11, 2023
Even before I got to Congress, I warned how S. 2155 would destabilize the banking industry.
Here's what I said: pic.twitter.com/L3QFl9eYZd— Rep. Katie Porter (@RepKatiePorter) March 11, 2023
SVB's Canadian branch is taken over by country's banking regulator following collapse
14:30 , Rachel Sharp
The Canadian branch of collapsed US bank Silicon Valley Bank has been taken over by the country's banking regulator.
Canada’s Office of the Superintendent of Financial Institutions (OSFI) announced on Sunday that it was taking temporary control of SVB’s unit in the country and is seeking to gain permanent control of the branch’s assets.
“By taking temporary control of the Canadian branch of Silicon Valley Bank, we are acting to protect the rights and interests of the branch’s creditors,” Peter Routledge, the superintendent of financial institutions, said in a statement.
SVB has operated in Canada since 2019 and had C$435m ($315.33m) in secured loans at the end of 2022.
The move came after SVB collapsed on Friday, marked the biggest US bank failure since the 2008 global financial crisis and the second-biggest in American history.
Fear grips Wall Street as bank stocks plunge after collapse of Silicon Valley Bank and Signature Bank
14:12 , Oliver O'Connell
Fear is gripping Wall Street about what’s next to topple following the second- and third-largest bank failures in US history, and stocks are falling Monday as investors scramble to find someplace safe to park their money.
The S&P 500 was 1.1 per cent lower in early trading, with the heaviest losses coming from banks. Investors are worried that a relentless rise in interest rates meant to get inflation under control are approaching a tipping point and may be cracking the banking system and broader economy. The US government announced a plan late Sunday meant to shore up the banking industry following the collapses of Silicon Valley Bank and Signature Bank since Friday.
The most pressure is on the regional banks one or two steps below in size of the massive, “too-big-to-fail” banks that helped take down the economy during the 2008 financial crisis. Shares of First Republic plunged 66.9 per cent, even after the bank said Sunday it had strengthened its finances with cash from the Federal Reserve and JPMorgan Chase.
Fear grips Wall Street as stocks plunge after banks collapse
Bitcoin price bounces back as Silicon Valley Bank rescued
14:00 , Rachel Sharp
Bitcoin has seen a sudden price rebound at the start of the week, rising nearly 10 per cent in the space of a few hours after fears about a potential banking crisis subsided.
The world’s leading cryptocurrency briefly dipped below $20,000 on Friday – its lowest level since the start of the year – following the collapse of crypto-friendly Silvergate Bank and fears about Silicon Valley Bank appeared to spook investors.
Bitcoin rallied after the US government said it would protect customers’ funds, while banking giant HSBC agreed to buy the UK operations of SVB.
Read the full story:
Bitcoin price bounces back as Silicon Valley Bank rescued
‘This is not a bailout of government taxpayer dollars'
13:57 , Gustaf Kilander
Ms Hochul said on Monday that the FDIC is in charge of Signature Bank and they'll be “communicating any further ... details about the future, but basically, the management has changed”.
“This is not a bailout of government taxpayer dollars,” she added. “This is simply using fees that are assessed on all banks by the FDIC” for “such a time they would need them so that money is there”.
She emphasized that “it's not from the taxpayers” and added that “there's new leadership” at the bank.
“So this is not continuing” with “the existing leadership that led the bank” into this situation.
‘Uncertainty could lead others to flee regional banks’
13:47 , Gustaf Kilander
Ms Hochul said on Monday that “people this morning waking up and deciding to take their money out of a bank because of uncertainty could lead others to flee regional banks”.
“And that would create incredible instability in a sector of the banking community that we think is critically important, and that would have had large ripple effects throughout the economy because these banks do hold deposits from small businesses and consumers, including those in the innovation economy, which is critically important to our lifecycle here in New York State,” she added.
New York State Department of Financial Services takes over Signature Bank
13:43 , Gustaf Kilander
New York Governor Kathy Hochul said on Monday that “the New York State Department of Financial Services took possession of a New York Chartered Bank known as Signature last night”.
“While that sounds extraordinary, that is what happens in terms of the transition from a temporary hold by the state and it's merely turned over to the FDIC,” she said.
“And this all is in the aftermath of what happened on Friday ... [with] Silicon Valley Bank out in California. And this had an effect on a bank here in particular Signature Bank,” she added.
Bank stocks plunge at the open on Wall Street
13:36 , AP
Bank stocks plunge at the open on Wall Street following failures of two banks; investors seeking safety rush into bonds.
Biden to ask Congress ‘to strengthen the rules for banks'
13:31 , Gustaf Kilander
Mr Biden spoke of the possible measures being taken to prevent a similar crisis from happening again.
He spoke of the requirements put in place during the Obama-Biden administration, and he criticised the Trump administration for rolling some of them back.
“I’m going to ask Congress and the banking regulators to strengthen the rules for banks, to make it less likely this kind of bank failure would happen again,” Mr Biden said. “And to protect American jobs and small businesses.”
‘Investors in the banks will not be protected’
13:19 , Gustaf Kilander
Mr Biden said on Monday that “investors in the banks will not be protected”.
“They knowingly took a risk. And when the risk didn't pay off, investors lose their money. That's how capitalism works,” he added.
PHOTOS: Biden speaks on banking system
13:16 , Gustaf Kilander
‘The management of these banks will be fired'
13:14 , Gustaf Kilander
Mr Biden emphasized that “no losses will be borne by the taxpayers. Instead, the money will come from the fees that banks pay into the Deposit Insurance Fund”.
“The management of these banks will be fired. If the bank is taken over by FDIC, the people running the bank should not work there anymore,” Mr Biden said.
‘Your deposits will be there when you need them'
13:10 , Gustaf Kilander
Mr Biden said in his speech on Monday that “Americans can have confidence that the banking system is safe”.
“Your deposits will be there when you need them. Small businesses across the country that have deposit accounts at these banks can breathe easier knowing they’ll be able to pay their workers and pay their bills,” he added.
‘No losses borne by the taxpayers’
13:05 , Gustaf Kilander
Mr Biden said on Monday morning that no losses will be borne by the taxpayers.
“Treasury Secretary Yellen and a team of banking regulators have taken immediate action ... all customers ... can rest assured ... they will be protected, and they'll have access to their money as of today. That includes small businesses across the country that bank there and need to make payroll, pay their bills and stay open for business – no losses. And this is an important point – no losses will be borne by the taxpayers,” he said.
Watch live as Biden speaks on US financial system following collapse of Silicon Valley Bank
12:58 , Oliver Browning
Watch live as Joe Biden is set to address the nation on Monday (13 March) following the collapse of Silicon Valley Bank.
In a statement on Sunday evening, the president said that he will deliver remarks on how the US will maintain a resilient banking system to protect America’s “historic economic recovery”.
“Over the weekend, and at my direction, the Treasury Secretary and my National Economic Council Director worked diligently with the banking regulators to address problems at Silicon Valley Bank and Signature Bank,” Mr Biden said.
“I am pleased that they reached a prompt solution that protects American workers and small businesses, and keeps our financial system safe. The solution also ensures that taxpayer dollars are not put at risk.”
The president added that he is “firmly committed to holding those responsible for this mess fully accountable”.
California regulators shut down Silicon Valley Bank last Friday, marking the biggest US bank failure since the 2008 global financial crisis.
First Republic Bank’s shares halve in premarket trading
12:50 , Rachel Sharp
Shares in First Republic Bank more than halved in premarket trading on Monday amid ongoing concerns about the stability of global finances following the collapse of Silicon Valley Bank.
First Republic on Sunday said it had secured additional financing through JPMorgan Chase & Co (JPM.N), giving it access to a total of $70 billion in funds through various sources.
The lender also said it had an additional borrowing facility from the U.S. Federal Reserve.
Despite the cash infusion, Raymond James double downgraded the bank’s stock to “market perform” from “strong buy”, highlighting the risk of deposit outflows that First Republic faces from panicked large depositors after the bank run at SVB last week.
The bank’s stock was last down 74% at $21.11 on Monday.
“While the bank (SVB) is better positioned for potential deposit outflows on Sunday evening than it may have been earlier in the weekend, if there are net deposit outflows, it will shrink the EPS power of the bank,” Raymond James analyst David Long wrote in the note.
US authorities launched emergency measures on Sunday to shore up confidence in the banking system after the failure of Silicon Valley Bank (SIVB.O) threatened to trigger a broader financial crisis.
First Republic’s shares were leading losses among other regional lenders, with Western Alliance (WAL.N) down over 26% in trading before the bell.
Additional reporting from Reuters
Biden unlikely to bail out Silicon Valley Bank
12:40 , Rachel Sharp
Washington appears to have reached its limit with the buckwild investing and carefree nature of America’s finance and tech sectors and this weekend signalled that a bailout for Silicon Valley Bank, which is now in danger of being unable to ensure all uninsured deposits, is unlikely.
That’s bad news for the companies and individuals with uninsured stakes in the massive institution, which was known for catering to an exclusive clientele in the tech industry. As investors blame a handful of venture capitalists for triggering the bank run, most were hoping that Washington would provide at least some relief in the event that the bank’s assets cannot be bought by another, healthier firm.
Though there was support for such action in the centrist wings of the GOP and Democratic Party alike, the White House’s position was laid out this weekend by Janet Yellen, chair of the Federal Reserve.
Read the full story here:
Biden unlikely to bail out Silicon Valley Bank, as right calls failed bank ‘woke’
US government introduces emergency measures
12:25 , Rachel Sharp
While the Biden administration has signalled it has no intentions of bailing out the banks, it has introduced emergency measures to protect the US economy and give bank clients access to their funds at no cost to US taxpayers.
Secretary of the Treasury Janet Yellen, Federal Reserve Board Chair Jerome Powell, and FDIC Chairman Martin Gruenberg released a joint statement on Sunday announcing the steps.
“Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system,” they said.
“After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors.
“Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”
The Federal Reserve Board will also make additional funding available to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.
“The US banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry. Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe,” the statement added.
Those with money at the banks will have full access to it from Monday and no losses will be borne by the taxpayer.
However, the regulators said that there will be no bailouts for the banks and some shareholders and unsecured creditors will lose all of their investments.
Trump blamed over Silicon Valley Bank collapse for watering down financial regulations
12:15 , Rachel Sharp
Critics looking to assign blame for the collapse of Silicon Valley Bank have found possible culprits in Donald Trump and Republican senators.
Though little known outside of Silicon Valley, the SVB was the leading lender to tech firms and startups before it crumbled on Friday.
SVB announced on Wednesday that it had sold a number of securities at a loss, and that it planned to sell $2.25bn in new shares to help right its balance sheet.
Read the full story here:
Trump blamed over Silicon Valley Bank collapse for cutting down financial regulations
UPDATE: Biden now set to deliver SVB speech at 9am ET
12:06 , Rachel Sharp
The White House has now said that President Joe Biden will deliver remarks “on maintaining a resilient banking system and protecting our historic economic recovery” at 9am ET on Monday.
In a statement on Sunday evening, the president said that he address the American people on Monday morning about the sudden collapse of Silicon Valley Bank, which marked the biggest US bank failure since the 2008 global financial crisis and the second-biggest in American history
“Over the weekend, and at my direction, the Treasury Secretary and my National Economic Council Director worked diligently with the banking regulators to address problems at Silicon Valley Bank and Signature Bank,” he said.
“I am pleased that they reached a prompt solution that protects American workers and small businesses, and keeps our financial system safe. The solution also ensures that taxpayer dollars are not put at risk.
“The American people and American businesses can have confidence that their bank deposits will be there when they need them. I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again.”
Biden to address nation on Silicon Valley Bank collapse at 8am ET
11:47 , Rachel Sharp
President Joe Biden is set to address the nation about the sudden collapse of Silicon Valley Bank, which marked the biggest US bank failure since the 2008 global financial crisis and the second-biggest in American history.
In a statement on Sunday evening, the president said that he “will deliver remarks on how we will maintain a resilient banking system to protect our historic economic recovery” in a speech to the American people on Monday morning.
“Over the weekend, and at my direction, the Treasury Secretary and my National Economic Council Director worked diligently with the banking regulators to address problems at Silicon Valley Bank and Signature Bank,” he said.
“I am pleased that they reached a prompt solution that protects American workers and small businesses, and keeps our financial system safe. The solution also ensures that taxpayer dollars are not put at risk.
“The American people and American businesses can have confidence that their bank deposits will be there when they need them. I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again.”
Mr Biden will address the nation at 8am ET.
Second bank closed as regulators say they will protect Silicon Valley Bank deposits at no cost to taxpayer
11:05 , Matt Mathers
All clients of Silicon Valley Bank will have access to their funds from Monday at no cost to US taxpayers, federal regulators announced as a second bank was shuttered.
Secretary of the Treasury Janet Yellen, Federal Reserve Board Chair Jerome Powell, and FDIC Chairman Martin Gruenberg released a joint statement on Sunday evening outlining what they say are decisive actions to protect the US economy and strengthen public confidence in the banking system.
“After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors,” the statement reads.
Oliver O’Connell reports:
Second bank closed as regulators move to protect Silicon Valley Bank deposits
Watch: UK banking system is ‘resilient'
10:50 , Matt Mathers
Jeremy Hunt told broadcasters that the UK’s banking system is "resilient" amid concerns sparked by the collapse of Silicon Valley Bank.
The chancellor told broadcasters, following the sale of the banking arm to HSBC: "We always have to watch everything that’s happening everywhere in the world when it comes to financial stability.
"But what I would say is the Bank of England is very clear - the UK banking system is extremely secure, it’s well capitalised.
"And I think we demonstrated that resilience by what was happening over the weekend and the fact that we were able to come up with a solution so quickly."
Biden will address the nation about the collapse of Silicon Valley Bank
10:30 , Matt Mathers
President Joe Biden is set to address the nation about the sudden collapse of Silicon Valley Bank, which marked the biggest US bank failure since the 2008 global financial crisis and the second-biggest in American history.
In a statement on Sunday evening, the president said that he “will deliver remarks on how we will maintain a resilient banking system to protect our historic economic recovery” in a speech to the American people on Monday morning.
Rachel Sharp reports:
Biden will address the nation about the collapse of Silicon Valley Bank
‘Anxious weekend'
10:16 , Matt Mathers
A tech boss has told of the “anxious weekend” he had before HSBC stepped in to save collapsed lender SVB earlier this morning.
Toby Mather, founder and chief executive of Lingum, an education start-up, said his company would have struggled to pay staff wages in a few weeks’ time.
"We had enough money in bank accounts outside the UK and enough revenue coming through each week from our customers that we could look our staff in the eyes at nine o’clock this morning and say we can make payroll in two weeks, but it would have been very uncertain from then", he told the BBC.
