The Limited Times

Now you can see non-English news...

The Rise and Fall of Silicon Valley Bank: A Visual Tour of a Bank Collapse

2023-03-20T10:47:19.130Z


The chain of adversities that doomed the US entity begins with a paradoxical stroke of luck: the pandemic


Silicon Valley Bank (SVB) was born in 1983, a bank specializing in emerging companies in the technology sector.

His business was based on receiving money from these businesses and lending it to them.

For more than 30 years, the firm settled smoothly.

DEPOSITS

LOANS

SILICON VALLEY

BANK

DEPOSITS

LOANS

SILICON VALLEY BANK

Then, the pandemic stepped on the accelerator: the technological ones prospered with the move to the internet.

And central banks and governments injected abundant liquidity into their economies to preserve financial stability.

Silicon Valley Bank Nasdaq Stock

717.4

Oct 2021

700 dollars

500

2

300

1

100

0

1990

2000

2010

2020

The first decades of SVB are bonanza.

The entity grows little by little.

Build trust.

1

The revolution of technology startups during the pandemic multiplies the value of SVB shares by seven.

2

Source: investing.com

Silicon Valley Bank Nasdaq Stock

717.4

Oct 2021

700 dollars

The revolution of technology startups during the pandemic multiplies the value of SVB shares by seven.

500

300

The first decades of SVB are bonanza.

The entity grows little by little.

Build trust.

100

0

1990

nineteen ninety five

2000

2005

2010

2015

2020

Source: investing.com

Silicon Valley Bank Nasdaq Stock

717.4

Oct 2021

700 dollars

The revolution of technology startups during the pandemic multiplies the value of SVB shares by seven.

500

300

The first decades of SVB are bonanza.

The entity grows little by little.

Build trust.

100

0

1990

nineteen ninety five

2000

2005

2010

2015

2020

Source: investing.com

Tech profits turned into a flurry of deposits for SVB.

DEPOSITS

SILICON VALLEY

BANK

DEPOSITS

SILICON VALLEY BANK

More deposits and fewer loans saw SVB enter 2021 with coffers fuller than ever.

In four years, he accumulated 153,000 million dollars.

Silicon Valley Bank Deposits

insured

uninsured

200,000 million

of dollars

200,414

The bank saw strong deposit growth during the pandemic.

Many of them

without insuring

47,274

0

2019

2020

2021

2022

2023

Source: FDIC (Federal Deposit Insurance Corporation).

Silicon Valley Bank Deposits

insured

uninsured

200,000 million

of dollars

200,414

The bank saw strong deposit growth during the pandemic.

Many of them

without insuring

100,000

47,274

0

2019

2020

2021

2022

2023

Source: FDIC (Federal Deposit Insurance Corporation).

Silicon Valley Bank Deposits

insured

uninsured

200,000 million

of dollars

The bank saw strong deposit growth during the pandemic.

Many of them

without insuring

200,414

100,000

47,274

0

2019

2020

2021

2022

2023

Source: FDIC (Federal Deposit Insurance Corporation).

In an attempt to make its burgeoning assets profitable, the Californian entity sought a long-term investment that, on paper, would be among the safest in the world: treasury bonds.

invested deposits

in treasury bonds

Interests

fluctuations

Investing in treasury bonds guarantees the return of the principal with interest and avoids losing money due to market fluctuations.

invested deposits

in treasury bonds

Interests

fluctuations

Investing in treasury bonds guarantees the return of the principal with interest and avoids losing money due to market fluctuations.

invested deposits

in treasury bonds

Interests

fluctuations

Investing in treasury bonds guarantees the return of the principal with interest and avoids losing money due to market fluctuations.

What SVB could not foresee was the war in Ukraine, the energy crisis and, as a final blow, an increase in interest rates that sought to curb runaway inflation, but also caused the value of bonds to fall.

In addition, startups were no longer swimming in the abundance of 2020: they needed money and began to withdraw deposits.

DEPOSITS

SILICON VALLEY

BANK

DEPOSITS

SILICON VALLEY BANK

SVB was facing the threat of increasing demand for liquidity with part of its assets trapped in bonds.

He had no choice but to recover the investment prematurely by breaking the guarantee conditions of the bond and at a time when they were worth less due to the rise in interest rates in the US.

invested deposits

in treasury bonds

On March 8, SVB is forced to withdraw treasury bonds when they are undervalued.

Lose $1.8 billion.

invested deposits

in treasury bonds

fluctuations

On March 8, SVB is forced to withdraw treasury bonds when they are undervalued.

Lose $1.8 billion.

invested deposits

in treasury bonds

fluctuations

On March 8, SVB is forced to withdraw treasury bonds when they are undervalued.

Lose $1.8 billion.

The sale of bonds, hasty and with inevitable losses, added to the bank's intention to make a capital increase.

Both painted a portrait of a bank eager for resources to stay afloat.

The image ran through the SVB ecosystem like a chill and fueled mistrust.

DEPOSITS

His clients withdraw 42,000 million dollars in just 10 hours.

SILICON VALLEY

BANK

DEPOSITS

His clients withdraw 42,000 million dollars in just 10 hours.

SILICON VALLEY BANK

En cuestión de horas, SVB se dio un batacazo inédito. El banco se desangraba el 9 de marzo a un ritmo de un millón de dólares por segundo. En la banca moderna, el pánico corre como la pólvora en las redes sociales y las masas no necesitan agolparse en la puerta de la sucursal para reclamar su dinero. Además, al tratarse de empresas, las retiradas eran de mayor cuantía.

Cotización Nasdaq de Silicon Valley Bank

300 dólares

200

Las acciones

de la entidad se desplomaron un 60% en un día.

100

0

16 febrero

24 febrero

1 marzo

9 marzo

Fuente: investing.com

Cotización Nasdaq de Silicon Valley Bank

300 dólares

200

Las acciones de la entidad se desplomaron un 60% en un día.

100

0

16 febrero

24 febrero

1 marzo

9 marzo

Fuente: investing.com

Cotización Nasdaq de Silicon Valley Bank

300 dólares

200

Las accionesde la entidad se desplomaron un 60% en un día.

100

0

16 febrero

24 febrero

1 marzo

9 marzo

Fuente: investing.com

El 10 de marzo, la quiebra se hizo oficial como la segunda más grande de la historia de la banca en EE UU. El Fondo de Garantía de Depósitos (FDIC), tomó el control de la entidad y trató de frenar el contagio a otros bancos asegurando a los clientes de SVB y del también caído Signature Bank que recuperarían sus depósitos. Esta garantía amparó incluso a aquellos que superaban el límite establecido de 250.000 dólares y que, en el caso del banco californiano, eran más del 85%.

Pese a los esfuerzos de las autoridades, el colapso incontenible del banco de las startups no ha dejado ilesos a los supervivientes. Desde la quiebra, otras entidades regionales de parecidas dimensiones han visto cómo sus clientes optan por trasladar sus cuentas a los grandes bancos estadounidenses, como JP Morgan o Citigroup.

SILICON

VALLEY BANK

FIRST REPUBLIC

BANK

WESTERN

ALLIANCE

SIGNATURE

BANK

PACWEST

J.P. MORGAN

WESTERN

ALLIANCE

SILICONE

VALLEY BANK

FIRST REPUBLIC

BANK

SIGNATURE

BANK

PACWEST

J.P. MORGAN


With the collaboration of

Álvaro Sánchez

Follow all the information on

Economy

and

Business

on

Facebook

and

Twitter

, or in our

weekly newsletter

Subscribe to continue reading

Read without limits

Keep reading

I'm already a subscriber

Source: elparis

All business articles on 2023-03-20

Similar news:

Trends 24h

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.