Customers line up a block in front of Silicon Valley Bank after collapse sparks fears of losing $250,000
Dozens of customers lined up to withdraw their cash on Friday after the sudden collapse of Silicon Valley Bank.
Footage posted to Twitter showed customers queuing block-by-block outside the entrance of a Bay Area store in Menlo Park, Calif., in the pouring rain.
There were similar scenes at other branches of the bank, including in Manhattan, where panic reached such proportions that building managers at the SVB office called the police after a group of disgruntled tech founders showed up at the door to withdraw their money.
Founded in 1982, SVB was the largest bank in Silicon Valley and specialized in lending to start-up technology companies and providing funding to tens of thousands of early stage companies.
But the company’s shares slumped more than 80 percent after it stunned the market Wednesday night by warning it was posting a loss of $1.8 billion following a bailout of its asset portfolio, which consisted mostly of US Treasuries US dollars had suffered.
After the bank’s sudden collapse, customers lined up to withdraw their money from Silicon Valley Bank. Pictured here, customers outside the Menlo Park store
Dozens of customers lined up outside the store in Menlo Park, California
A bank employee tells customers that the Silicon Valley Bank (SVB) headquarters in Santa Clara, California, will be closed on Friday
The lender’s troubles sparked a rush of customer withdrawals and forced California regulators to step in after a record plunge in its share price raised concerns about its stability.
SVB’s bankruptcy is the largest since the collapse of Washington Mutual, which imploded during the 2008 financial crisis and was then America’s largest savings and loan company.
Trading in the shares halted on Friday as the crisis escalated. The company was reported to be in talks to sell itself, but any chance of a deal quickly faded as its customers rushed to get their money.
The defeat in SVB shares spread to major US banks, with JP Morgan shares falling 7 percent this week, Citigroup down 7.1 percent, Morgan Stanley down 7.2 percent, Goldman Sachs down 7 percent and Bank of America by 11 percent.
Shares in SVB fell 67 percent from $267 to $106 on Thursday before halting trading
The NYPD was called after “about a dozen” financiers, including former Lyft executive Dor Levi, showed up outside a Park Avenue branch of SVB when a run on the bank on Friday morning forced the Federal Deposit Insurance Corporation to dump her confiscate property
At the Park Avenue branch, the doors were locked and only employees with a key card were allowed into the building
Two police cars pulled up outside the Park Avenue bank office in Manhattan on Friday after investors scramble to withdraw their money
People queue outside the closed Silicon Valley Bank in Santa Clara on Friday
A sign at the entrance to Silicon Valley Bank is displayed. The Federal Deposit Insurance Corporation seized the bank’s assets on Friday, marking the largest bank failure since Washington Mutual at the height of the 2008 financial crisis
European banks were also hit, with shares in Deutsche Bank falling 7.4 percent and France’s Societe Generale and BNP Paribas falling 4.5 percent and 3.8 percent, respectively.
The 16th largest bank in the country, SVB has been a major lender to start-up tech companies, healthcare companies and venture capital-backed companies, including some of the industry’s best-known brands.
“This is an extinction-level event for startups,” said Garry Tan, CEO of Y Combinator, a startup incubator that launched Airbnb, DoorDash and Dropbox and referred hundreds of entrepreneurs to the bank.
“I’ve heard from literally hundreds of our founders asking for help on how to get through this. They ask, “Do I have to furlough my workers?”
Almost half of the U.S. technology and healthcare companies that went public last year after receiving early funding from venture capital firms were clients of Silicon Valley Bank, according to the bank’s website.
The bank also boasted of its ties to leading technology companies such as Shopify, ZipRecruiter and one of the leading venture capital firms, Andreesson Horowitz.
Tan estimates that nearly a third of Y Combinator’s startups won’t be able to make their paychecks at some point in the next month if they can’t access their money.
Internet TV provider Roku was among the victims of the bank collapse. A regulatory filing on Friday said about 26% of its cash — $487 million — was on deposit with Silicon Valley Bank.
Roku said its deposits with SVB are mostly uninsured and it doesn’t know “the extent to which” it can recover them.
As part of the seizure, California banking regulators and the FDIC transferred the bank’s assets to a newly created entity — the Deposit Insurance Bank of Santa Clara. From Monday, the new bank will start paying out insured deposits.
Then the FDIC and California regulators plan to sell the rest of the assets to heal other depositors.
The failure came with incredible speed. Some industry analysts suggested on Friday that the bank is still a good company and a smart investment. Meanwhile, Silicon Valley Bank executives were trying to raise capital and find additional investors. However, trading in the bank’s shares was halted prior to the stock market’s opening bell due to extreme volatility.
Just before noon, the FDIC set about closing the bank. Remarkably, the agency didn’t wait until close of business, which is the typical approach. The FDIC couldn’t immediately find a buyer for the bank’s assets, signaling how quickly depositors were being paid out.
Founded in 1982 and based in Santa Clara, California, the financier was one of the oldest and largest banks in Silicon Valley and managed most of the region’s local deposits. Its collapse marks a quick fall from favor for a lender valued at more than $44 billion a year ago.
At the time of its collapse, the bank had total assets of about $209 billion, the FDIC said. It was unclear how many of his deposits were above the $250,000 insurance limit, but previous regulatory reports showed many accounts exceeded that amount.
It primarily focused on lending to technology companies and providing services for private equity and venture capital groups to invest in the sector.
Chief Greg Becker had to struggle to boost confidence in the bank as the rapidly escalating crisis caused many of its supporters to withdraw their money, leaving them facing a liquidity crunch.
In a hastily organized call on Thursday, Becker, 52, advised ailing SVB supporters and founders to “stay calm” and said: “The last thing we need from you is panic.”
Source: | This article originally belongs to Dailymail.co.uk
https://www.soundhealthandlastingwealth.com/celebrity/customers-line-up-around-block-outside-silicon-valley-bank-after-collapse-sparks-fears-lose-250000/ Customers line up a block in front of Silicon Valley Bank after collapse sparks fears of losing $250,000