Black Dollar Magazine

BLACK DOLLAR MAGAZINE

For Black entrepreneurs, creatives, decision-makers and executives

Sign up for FREE BDM newsletter
     
Sign in Subscribe
By Jordan Maxwell in Finance —

SVB collapse: What financial analysts are saying about the bank's failure and its impact

Several analysts and financial firms discussed their points of view on the Silicon Valley Bank crisis, which some say is the worst to occur since the 2008 financial crisis.

SVB collapse: What financial analysts are saying about the bank's failure and its impact
UNSPLASH PHOTO

The Federal Deposit Insurance Corporation (FDIC) has stepped in to seize control, following the collapse of Silicon Valley Bank and New York-based Signature Bank.

“We are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital role of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth,” according to a joint statement from Secretary of the Treasury Janet L. Yellen, Federal Reserve Board chair Jerome H. Powell, and FDIC Chair Martin J. Gruenberg.

The news comes following the collapse of the U.S.’ second and third-largest lenders after an unsuccessful attempt to raise capital. SVB CEO Greg Becker and its chief financial officer and chief operating officer reportedly sold at least 28 per cent of their stock weeks before shareholders and analysts took note, according to BNN Bloomberg.

Analysts say that by buying government bonds at fixed interest rates, they lost value after several rate hikes. With billions of dollars in venture debt, the collapse could impact Black tech entrepreneurs, women of colour, and other businesses for some time.

To protect its depositors and instill confidence in the U.S. banking system, the Federal Reserve Board announced that affected companies and venture capital firms can access their funds as of Monday (March 13).

Moreover, on Sunday, it announced it will make additional funding available to banks affected by the crisis to meet the needs of their depositors.

But as of March 13, First Republic Bank’s shares are reportedly down 74 per cent, and trading has halted at Western Alliance Bancorp, according to a tweet from NBC. Crypto group Circle admitted a $3.3 billion hit due to exposure from the collapse.

Meanwhile, according to regulatory records, the Canadian branch of SVB Financial Group recorded $435 million (US$314 million) in secured loans last year, more than double the $212 million from the previous year. Among its clients are the pharmaceutical business HLS Therapeutics Inc. and e-commerce software provider Shopify Inc., according to the business news website.

In the U.K., roughly 180 tech companies sent a letter to U.K. Chancellor Jeremy Hunt asking him to intervene. HSBC UK acquired its assets for one euro, Hunt said in a tweet. The country’s SVB unit is now insolvent; it’s no longer taking new customers, according to BNN Bloomberg.

Other countries around the world have also been affected.

Reaction swirling as feds clean up

Naturally, several analysts and financial firms discussed their points of view on the crisis, which some say is the worst to occur since the 2008 financial crisis. See what they’re saying below:

Previous

Toronto's TRU Tattoo Studio bringing trauma-informed approach and inclusiveness to industry

 Next

Sweet Kiwi, a Black-owned frozen yogurt brand, strikes deal with Robert Herjavec on ‘Shark Tank’

You might also like...