The American authorities took the decision, Friday, March 10, to close the Silicon Valley Bank (SVB), in great difficulty. The Californian regional bank, which has become the preferred establishment for start-ups and private equity funds in the technology sector, is in turmoil and has experienced massive withdrawals that threaten its survival.
Control of deposits has been entrusted to an American guarantee agency, the FDIC. The latter plans to reopen the bank’s 17 branches on Monday, in California and Massachusetts. It intends to authorize customers to withdraw up to 250,000 dollars (about 234,515 euros), the amount usually guaranteed. Those who have more in their accounts, which is the vast majority of the bank’s customers, are advised to contact the branch.
Little known to the general public, Silicon Valley Bank, headquartered in California, is the 16e American bank by volume of assets, specializing in the technology sector. With the latter facing difficulties, between rising interest rates and the turmoil in tech, SVB customers have withdrawn a lot of money from their accounts in recent months. To have enough liquidity, the bank announced on Wednesday that it was seeking to raise capital quickly. In the process, she lost 60% on the New York Stock Exchange on Thursday and her title was suspended on Friday before the start of the session.
The difficulties it is experiencing affected other medium-sized banks on Friday, in particular First Republic (−31.19%), 14e American establishment. His profile is particularly worrying because his clientele is mainly made up of wealthy individuals and companies whose deposits exceed $250,000 guaranteed. Also battered, the bank of Salt Lake City (Utah) Zions Bancorporation (− 6.26%), Huntington (− 4.80%), whose headquarters are in Ohio, or Signature Bank (− 18.19% ), which has operations in California.
US Treasury Secretary Janet Yellen said she was following ” closely “ the situation of the banking sector. “It’s been a while since we’ve seen such stress on the financial sector”commented before the announcement of the closure Edward Moya, of the financial analyst firm Oanda, for whom “the general feeling is that this will not trigger panic on the big banks”. JPMorgan Chase thus appeared up Friday by 1.35%, City resumed 1.55% and Bank of America, 1.44%. On the other hand, the aftershock was felt in Europe, where Societe Generale lost 4.49% in Paris and Deutsche Bank, 7.35% in Frankfurt.
On Wall Street, the general trend was very volatile around 6 p.m. The Dow Jones fell 0.11%, the S&P 500 0.30% and the Nasdaq 0.42%. Risk aversion benefited government bonds, considered to be safe assets. Prices jumped due to strong demand, but bond rates move in the opposite direction of prices. As a result, the yield on ten-year US Treasury bonds fell to 3.72% from 3.90% the previous day.
In Europe, the indices failed to make up for their losses at the start of the session: Paris fell by 1.30%, Frankfurt by 1.31%, London by 1.67%.