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US intervenes in Silicon Valley Bank, backing thousands of emerging companies

The United States this Friday announced the closure of Silicon Valley Bank (SVB) due to lack of liquidity and insolvency, and announced that it will take measures to guarantee the protection of all its insured deposits. The California Department of Financial Protection, where the entity is headquartered, explained in a statement that it owned SVB and that it had transferred the management of its assets to the Federal Deposit Insurance Corporation (FDIC).

The FDIC revealed in another note that it has taken steps to protect deposits and that all customers with insured funds will have full access to them no later than next Monday. For those who have deposits that are not guaranteed by the federal government, the FDIC will pay them a dividend next week, and they will receive a certificate for their remaining funds, which will be returned after the sale of the bank’s assets.

The bank, which specializes in servicing Valley technology startups, announced Wednesday that it was seeking to raise capital to deal with its financial difficulties, which have led to $21 billion worth of divestments and losses. About 1800 million.

The announcement prompted many customers to withdraw their funds and plunged the company’s stock price, which in turn affected the broader banking industry, both in the United States and abroad. In the same week, Silvergate Bank, a major American financial institution specializing in operations with cryptocurrencies, also collapsed.

The FDIC, which is the fund that guarantees bank deposits in the United States, asks SVB customers to contact it if they have accounts above $250,000, which is the standard amount of insurance in the country. Authorities have also created a successor entity to SVB, which will resume bank operations no later than next Monday to guarantee customer service, access to funds or check payments.

Silicon Valley Bank had 17 branches in California and Massachusetts and had about $209 billion in assets and about $175.4 billion in deposits at the end of 2022, according to the FDIC.

Wall Street, which opened in the red today but then rallied, returned to losses on the regulatory shutdown of SVB.

Source: El Diario





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