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The bank collapse in the USA: what can we learn from it about the situation in Israel? - Voila! Money


Even before the extent of the damage in the situation Silicon Valley Bank found itself in became clear - many rushed to align themselves with the Israeli high-tech right, in a combination of a desire to help and public relations. What can be learned from the affair?

It is not so pleasant to see a closed bank (Photo: ShutterStock)

It's not about human lives, fortunately, but in financial terms, what happened on Friday, when Israel entered the relative calm of the weekend, was very reminiscent of what happened a day before, when the Prime Minister received a package containing a report on the attack in Tel Aviv, while sitting at home The Knesset in Rome.

If we continue to insist on the terminology of disasters - from natural disasters to those that are man-made, the immediate attempt was to understand what exactly happened at "Silicon Valley Bank" - and immediately after that to find out if there were any Israelis among the victims.

The answer to both questions is still not clear, although the details are being collected.

What happened is that the bank's management did not correctly estimate the duration of the crisis in the capital market, which mainly affects its customers, the technology companies - it was not at all prepared for it.

In general (and this explanation is a bit simplistic and ignores nuances, but provides a little background for those who are not in the details) a banking system is built on the relationship between equity and liabilities.

There is hardly (and maybe not at all) a bank that can stand firm if at that given moment all its customers come to cash out their money - and this is exactly what happened to a bank in Silicon Valley.

The weakness in the capital market led to recruitment difficulties among the high-tech companies, especially among the start-up companies, most of which do not yet have a stable revenue model, certainly not a profitable one, therefore they depend on their ability to raise investments.

These companies, whose oxygen pipeline has become narrower in the past year, have reached the point where they use up all their bank credit lines.

The bank's incorrect assessment was that inflation would stop, the central bank would stop raising the interest rate, the capital markets would breathe a sigh of relief and the technology companies would be allowed to enjoy a little oxygen.

When it did not happen, the bank tried to sell assets quickly in order to put money into the fund to meet its current obligations.

The problem is not only that the move did not go well, but that it conveyed distress - and this distress turned into panic among many of the companies that ran to the bank to withdraw their money from it.

We will return to this moment, but first of all we will try to understand, as the way we deal with disasters (even if it is a financial disaster)

were there any Israelis among the victims?

The answer to this question is yes, but it is not clear how much.

At first they said dozens, then they said hundreds, apparently the first estimate is more accurate in terms of companies.

In terms of individuals, i.e. people who may suffer severe economic damage, it is at least hundreds, if not thousands (who may lose their jobs at the start-up company which will be irreparably damaged).

It should be noted that at this stage, the extent of the damage is still unclear, not only because it is not yet clear how much money the bank lost, but because it is not clear how the American government will act.

The authorities' clarification that on Monday, that is, after the weekend in the USA, it will be possible to withdraw up to 250,000 dollars per customer, inspires both hope and panic - panic because the question is what will happen to the rest of the money? And hope because the administration's attempt to put order in the mess, perhaps indicates taking Liability, that is, for a "rescue" that will guarantee customers at least part of their money, maybe even most of it.

He received information in Rome not only about the attack in Tel Aviv, but also about the collapse of the bank.

Prime Minister Benjamin Netanyahu (photo: official website, no)

Meanwhile in Israel (and Rome)

It is not for nothing that we mentioned natural disasters, because as usual, even before the dimensions of the disaster become clear, many are pushed to stand on the plane's wing and take pictures with the aid delegation that goes to the area of ​​the noise.

You don't have to be cynical about the help offered, which is sometimes necessary, real and even life-saving, but you have to remember that there is also a good photo-opportunity here, that is - a good deed with a promotional coupon on its side. The first to jump on the opportunity was also the most experienced person in such

situations ,

Prime Minister Benjamin Netanyahu:

"I am closely following the collapse of the American investment bank SVB, which is creating a deep crisis in the high-tech world," Netanyahu said. "I

held talks from Rome with high-tech officials in Israel, and upon my return to Israel I will discuss with the Ministers of Finance and Economy and the Governor of the Bank of Israel the extent of the crisis.

If necessary, out of responsibility for hi-tech companies and employees in Israel, we will take steps that will help Israeli companies, whose operations are centered in Israel, to overcome the liquidity crisis created for them due to the upheaval."

The prime minister did not miss an opportunity to appropriate what is good for himself, adding: "Israel's economy is strong and stable, and this is again reflected in this crisis as well."

Contrary to Netanyahu, the Ministry of Finance had to wait until Shabbat came out to start drafting the following message: "The Ministry of Finance, the Bank of Israel, the Securities Authority and the Innovation Authority are establishing a dedicated team to examine the consequences of the collapse of SVB Bank. Following the collapse of SVB Bank in the United States and its possible impact on Israeli high-tech

companies , Finance Minister Bezalel Smotrich ordered the establishment of a dedicated team to monitor the issue.

The team, led by the Director General of the Ministry of Finance, Adv. , the funds and financial institutions in Israel and the US for the purpose of receiving data and analyzing the possible impact on the Israeli economy and, as necessary, for formulating a response to Israeli companies."

, even published a few words on a personal note: "The collapse of the bank is a significant event for both the American economy and the Israeli economy. We promised to work so that the Israeli economy would be an island of stability and certainty in the stormy economic waters of the world, and with God's help we will do so. The State of Israel will stand to the right of the local high-tech industry and help it Succeed the crisis and continue the momentum of development and action."

More in Walla!

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The banking system in Israel hastened to publish notices of aid to local hi-tech companies that were affected (Photo: ShutterStock)

The bankers are coming

Not only the politicians were quick to react, but also the banks in Israel.

Bank Hapoalim

announced that Poaleim Hitech has opened a hotline for high-tech companies and bridging loans to interested companies:

"Against the background of uncertainty surrounding the events of the weekend in the context of the SVB case, Israeli high-tech companies have been working for the last two days to collect their funds in Israel. As

of Thursday, the bank and Poaleim Hitech established a room A situation for the purpose of supporting the opening of accounts at the bank and its various branches in Israel and abroad and making money transfers to the accounts of the bank's members.

Starting tomorrow (that is, today. N.K.) the bank will allow companies to contact emergency lines that it has made available to companies that wish to do so.

The emergency lines, through the customer relationship managers at Hi-Tech, will offer companies different routes for obtaining credit in Israel or the USA (according to customer demand):

1. Establishing a credit line: a dedicated situation room that will examine dedicated credit requests, with a fast SLA, subject to examining the company's financial situation and according to parameters at the bank's discretion.

2. Bridging loans: Providing a loan for the purpose of assisting companies in paying their salaries in the coming month against the company's commitment to transfer deposit funds to its bank account.

Mopoalim Hi-Tech stated that these are quick solutions to help the high-tech companies in their immediate distress, and in the future, additional solutions will also be provided as needed.

Hapoalim did not publish an official reference to this, but it was learned that the bank has already handled quite a few aid requests from various parties related to the bank's collapse, an urgent treatment that perhaps indicates the severity of the crisis.

Discount Bank and Discount Bank New York

(IDBNY) also

rushed to come to the aid of the companies affected by the collapse of SVB Bank.

Both banks allow quick account opening to help with business continuity, both in Israel and in the US.

In addition, companies backed by venture capital can receive bridging loans in the amount of up to 8 million dollars per company and no more than 30 percent of the amount of net assets found in SVB Bank.

Also, Discount will grant payday loans to the company's employees, in response to the case that employees do not receive salaries on time.

And not only Hapoalim and Discount.

Mizrahi Tefahot Bank


stated that: "The high-tech teams of Mizrahi Tefahot in Israel, the USA and England have announced that they are ready to provide a variety of quick solutions to Israeli companies that are among Silicon Valley Bank's clients.

Among other things, they will allow the opening of accounts and offer solutions to the liquidity crisis that the companies found themselves in following the collapse of the American bank.

Already on Thursday, a proactive appeal was made to the heads of the major venture capital funds in order to help and respond to the various companies"

The supervisor of the banks (who will soon finish his position) Yair Avidan.

A position that requires innovation and conservatism at the same time (Photo: Reuven Castro)

The financial lesson and the political lesson

There is no need to be cynical about the willingness of individuals, institutions and financial entities to help during the crisis, even though, as mentioned, the scope of this is still unclear.

That's why we won't give marks regarding which of these is a real desire to help in an emergency and what just looks good, but we will focus on two lessons - financial and political.

The financial lesson should be before the eyes of the supervisor of banks: in recent years the voices calling for the decentralization of the banking system, the encouragement of digital and direct banking and the granting of a license to smaller and less well-known entities to engage in the areas of savings, deposits, loan consolidation and more have increased greatly.

It will be said right away - these votes are justified.

The conservative financial market must also be perfected, decentralized and dispersed if we are to live in everything related to the development of the economy.

At the same time, the fall of Silicon Valley Bank is also a warning sign that every such request should be carefully examined - and even after a license has been granted, it should be conducted under strict regulation.

The fact that "veteran" Israeli banks, with or without quotation marks, can now lend a hand and help, while presenting great financial reports (for 2022), is largely a result of blessed conservatism.

The second lesson connects the financial and political worlds: there were many who were quick to point out the stability of Israel's economy and its financial institutions - quite rightly of course, but - there is also a but... The state of the Israeli economy is wonderful, our banking system is stable and signals to anyone who wants to withdraw from here Be careful not to put his money on the antlers of the deer.

But after all this has been said and written (rightfully so!),

the fall of SVB also tells another story


The only non-measurable parameter in the economy is the human factor: if, for example, the reform or the coercion (everyone chooses his favorite nickname) turns into action (passing in advanced readings, for example), there may be an effect here that is already "warming up on the lines" of a run to the bank - just like in Silicon Valley.

Such a run, God forbid, is really the beginning of the end - and this is the effect that all the economists who are convenient to paint as black people warn of.

This is also an important lesson that should be internalized, if you don't want to see queues of panicked customers in front of bank branches in Israel, because we already said at the beginning: no banking system, however strong and stable it may be, is built to deal with a given (theoretical?) moment, when all the customers stand at its gates and demand their money.

  • Of money

  • news


  • Benjamin Netanyahu

  • Bezalel Smotrich

  • Silicon Valley

  • Bank Hapoalim

  • Discount Bank

  • Mizrahi Bank

  • High tech

  • start up

Source: walla

All business articles on 2023-03-12

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