Silicon Valley Bank, selling managers’ shares and deposit risks for beginners – Corriere.it

infection risk?

Those doubts sent investors into a panic on Friday, with banks scrambling to banks that were not limited to SVB, but also extended to other lenders, mostly in California, as if that were a sufficient indication of weakness. So after a failed $2.25 billion capital raise, while Svb was shut down by the authorities and placed under the control of Fdic, the federal agency that insures deposits, PacWest Bancorp, First Republic, Western Alliance also ended up in the eye of the storm. Not only with the fall of stocks on the stock exchange, as Bacquet lost 49% in the past two days, Western Alliance 31% and First Republic 24%, but also with the onslaught of savers who asked to transfer their money to safer institutions. So much so that both First Republic and Western Alliance have tried to calm investors down by announcing that their cash and deposits will remain strong. When markets reopen on Monday, it will begin to be seen whether the swift intervention of the authorities helped reassure investors.

Sales managers

It is definitely not a good sign to find out SVB CEO Greg Baker sold $3.6 million in the company’s stock as part of a trading plan less than two weeks ago. The company has to reveal the huge losses that eventually led to its bankruptcy. It was the first time in more than a year that Baker sold shares in SVB Financial Group, SVB’s parent company, according to documents sent to the Securities and Exchange Commission.

Results

If a Silicon Valley bank collapse hits the ecosystem of high-tech start-ups to which it provided credit, which is already reeling from the crisis in the tech industry and rising interest rates, Silicon Valley entrepreneurs and workers are also likely to be high-tech. To pay the bill, with The risk of losing hundreds of jobs. In fact, Fdic only insures deposits up to $250,000, and it is conceivable that accounts were well above that cap. According to the Federal Reserve, only 93% of SVB deposits are insured, This is where the bank started operating when the problems started.

The government has about 48 hours to correct an irreversible mistake soon. By allowing @SVB_Financial to fail without protecting all of its depositors, the world has realized what an unsecured deposit is: an illiquid, unsecured claim on a failing bank,” Bill Ackman, director of the billionaire investor, wrote in a very long tweet about the Pershing Square Capital Management hedge fund. Evoke Tragedy scenarios early next week without government intervention.In the absence of JpMorgan, Citi or Bank of America, the acquisition of SVB before Monday’s opening is a possibility that he considers “improbable”. That is why Ackman is asking the government to svb all deposit insurance, Otherwise” the giant sucking sound you will hear is the withdrawal of pretty much all uninsured deposits from all but “systemically important” banks.

The first names of those involved in closing the bank also appear. American cryptocurrency company Circle said on Twitter that $3.3 billion of its $40 billion in coin reserves is being held in a Silicon Valley bank., which led to a decline in the value of its USDC token, as the cryptocurrency market is already reeling from the failure of two US banks this week. The department called for an urgent federal rescue plan for Svb.

But other companies, including Roku, Roblox, and listed Quotient, have also reported exposure to SVB to the US Securities and Exchange Commission, the US market watchdog. Roku said it has about $487 million in Svbrepresenting about 26% of its cash holdings as of March 10, 2023. Gaming platform Roblox said that about 5% of the $3 billion in cash and securities was held in SVB as of February 28, 2023. Digital marketing company Omnichannel and owner Coupons.com revealed, Quotient, reported Minor Impact, noting that it holds $400,000 in Silicon Valley Bank UK, the UK-based subsidiary of SVB.

Even in the rest of the world, we are starting to deal with the bankruptcy of Svb. In Great Britain, the Bank of England also announced bankruptcy proceedings for the British branch of Silicon Valley Bank. The BoE said the branch has a limited presence in the UK and does not present a systemic problem in the country’s financial system. Under UK bankruptcy proceedings, deposits of up to £85,000 (and up to £170,000 in the case of joint accounts) will be returned to clients. But according to press rumors, The Bank of London is said to be considering a bailout offer for the UK arm.

Re-opening of the bank

Meanwhile, the FDIC is organizing the reopening of the bank, which employed 8,528 people at the end of 2022. The federal agency has already created a new bank, National Bank of Santa Clara, For deposits and assets of Svb, it has been operating since Monday to facilitate withdrawals by clients of the bankrupt institution. the The employees have already been offered a 45-day job at 1.5 times their salary by Fdci. Workers will be hired and shown weekend benefits, while healthcare will be provided by former parent company SVB Financial Group. was told to the staff Continue to work remotely, with the exception of essential workers and branch employees.