Silicon Valley Bank (SVB) became the largest bankrupt US lender in more than a decaderaising fears of contagion in the tech and financial sectors and across the country and around the world.
US regulators took extraordinary steps to bolster confidence in the financial system, part of a hectic weekend that saw the surprise closure of Signature Bank of New York along with growing concerns about spillover effects for other regional lenders and the economy in general.
On March 13, the UK moved quickly to stop the fallout by selling the UK unit of SVB to HSBC Holdings Plc for £1. In other places, companies were counting their exposure, and most investors reassured the risk was manageable.
But the positive effect of the overnight support from US regulators quickly evaporated and actions indicated that the fallout from the incident is far from over.
Here’s a roundup of how companies, investors, and governments are responding:
(Also: The crisis that triggered the collapse of the Silicon Valley Bank in the United States).
USA
US Department of the Treasury, Federal Reserve, and FDIC
In an effort to prevent a broader crisis, the US authorities introduced new support for banks. According to Federal Reserve officials, it was big enough to protect the entire nation’s deposits.
The FDIC said it will resolve SVBs in a way that “fully protects all depositors.” The Federal Reserve also announced a new Bank Term Financing Program that offers one-year loans to banks on more favorable terms than it usually does. $25 billion is available.
First Republic Bank:
The California-based lender fell about 60% in premarket trading in New York after it moved to try to assuage concerns about its liquidity. The declines came after the bank said in a statement late Sunday that it had more than $70 billion in unused liquidity to fund deals from deals that included the Federal Reserve and JPMorgan Chase & Co.
Khosla Ventures
The Menlo Park-based venture capital firm sent an email to the founders saying it would step in and cover the payroll of some of its portfolio companies if they ran shortfalls due to funds tied up with SVB.
(We recommend: Silicon Valley Bank: US takes steps to contain bank failures).
United Kingdom
HSBC
The London-listed lender bought SVB’s UK unit in a deal that was completed immediately and financed from existing resources. “This acquisition makes excellent strategic sense for our UK business,” chief executive Noel Quinn said in the statement.
Polarean Imaging Plc
The medical imaging firm requested that its shares be temporarily suspended while it seeks clarification on next steps, adding that it has “sufficient cash outside of SVB to meet its immediate liquidity needs.”
Trustpilot Group Plc said SVB UK was its main banking partner, but added that it has other banking relationships that will allow it to carry on with ordinary business. Syncona and Learning Technologies also shared details of their relationships with SVB.
Naked Wines Plc
The wine distributor said it had a $60 million asset-backed credit facility, syndicated 50-50 between SVB and Bridge Bank. It is in talks with Bridge Bank and has started looking for new financial partners.
(Also: The resounding collapse of the bank of the ‘start-ups’).
Venture Life Group Plc
The consumer health company said it has a £30m revolving credit facility with SVB and Santander. It has started talks for Santander to take over SVB’s portion.
Sweden
alecta
Sweden’s largest pension fund will lose up to $1.1 billion on bets it made on banks caught up in the SVB collapse. The investor held a crisis meeting early Monday to discuss why he had invested $2 billion in Signature Bank, First Republic Bank and SVB.
Sweden’s financial watchdog has summoned Alecta and other financial firms to discuss the crisis, but the Financial Supervisory Authority said the Nordic nation’s financial system has “significant resilience” and can navigate the current turbulence.
Japan
SoftBank Group Corp.
The group is seen as one of the potentially most exposed companies given its huge investments in technology. The startups that SoftBank Vision Fund has invested in have deposits and loans with SVB. There are concerns that they could find themselves in a cash flow squeeze due to the collapse.
Sumitomo Mitsui Trust Holdings Inc
The Japanese asset manager held a 0.29% stake in SBV Financial Group at the end of the fourth quarter of last year.
China
Shanghai Pudong Development Bank
The state-owned Chinese lender owns a banking business with SVB and tried to reassure local clients by reminding them that the operations have been independent. SPD Silicon Valley Bank said in a statement that it has always operated stably in accordance with Chinese laws and regulations and has an independent balance sheet. The company was founded in 2012 as the first technology-focused bank in China, serving science and innovation companies.
(You can read: Before bank sales, be careful with paying for gasoline, the market or remedies with a card).
Andon Health Co
The company and its units had deposited about 5% of their cash and financial assets with SVB as of March 10, according to a statement sent to the Shenzhen stock exchange.
Germany
BaFin
The German financial regulator froze SVB’s branch in the country, which will not be able to sell assets or make payments. The regulator said the unit risks not being able to meet commitments to creditors, BaFin said in a statement. The bank also has to close its customer business. The German operations do not pose a danger to financial stability, BaFin said.
India
Nazara Technologies
The game developer said that two units indirectly related to the company had around $7.8 million. in cash balances in SVB.
Bloomberg
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