Silicon Valley Bank (AP), Santa Clara, Calif.
[Washington = Michio Yoshida]Financial authorities in the western state of California announced on the 10th that Silicon Valley Bank (Santa Clara, California), a medium-sized US bank whose main customers are IT companies and venture companies, fell into insolvency and went bankrupt. announced. According to US media reports, it is the second largest failed bank in US history after Washington Mutual, which went bankrupt during the Lehman shock in 2008.
As of the end of last year, Silicon Valley Bank had total assets of $209 billion (¥28.215 trillion), ranking 16th in the United States. The balance of deposits was $175.4 billion.
The US Federal Deposit Insurance Corporation (FDIC), the equivalent of Japan’s deposit insurance organization, acted as trustee and protected a certain amount of deposits. U.S. Treasury Secretary Janet Yellen consulted with relevant authorities, including the Federal Reserve Board (Fed), on the same day. “The banking payment system remains resilient and regulators have effective tools to deal with incidents like this,” he said. But the market has seen a heavy sell-off in bank stocks, fueling fears of financial instability.
U.S. IT companies have suffered from sluggish performance due to the reaction to “stay-at-home demand” due to the new coronavirus, and there has been a growing movement to withdraw deposits from the bank and others. On the other hand, with regard to financial institutions’ finances, interest rates rose sharply (bond prices fell) due to the rapid tightening of monetary policy by the Federal Reserve Board, and there were growing concerns about financial deterioration due to a decline in the value of bonds.
Under these circumstances, Silicon Valley Bank announced on the 8th that it posted a loss due to the sale of bonds. At the same time, the company announced a capital increase plan, but financial concerns increased. According to US reports, the outflow of deposits did not stop, with investment funds advising investee companies to withdraw their deposits from the bank.
The bank has 17 branches in California and eastern Massachusetts, according to the FDIC and others.