The Silicon Valley bank’s closure comes after it announced it was urgently seeking liquidity. Due to a situation that worries the entire financial sector, the listing of its shares on the New York Stock Exchange has been suspended.

The bank was shut down this Friday by the California Department of Financial Innovation and Protection, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver, authorities said in a statement.

The FDIC said depositors will have full access to their insured deposits by Monday morning at the latest. The federal agency insures each depositor up to at least $250,000.

Silicon Valley Bank (SVB) is a Californian bank specializing in the technology sector, which primarily deals with funds that invest in unlisted companies.

Little known to the public, it is the 16th largest US bank by assets.

The group, which operates in the United States, Europe, Asia and Israel, offers financial services to start-ups, from simple bank accounts to capitalization advice, among other things.

SVB states on its website that it cooperates with about 50% of technology companies.

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The bank’s parent, SVB Financial Group, announced Wednesday that it will try to raise $2.25 billion in fresh funding.

The group quickly sold a portfolio of $21,000 million in financial titles, at an estimated loss of $1,800 million.

SVB is trying to strengthen its finances, weakened by the withdrawal of clients.

According to The Wall Street Journal, citing sources close to the banking sector, investment funds advised companies to withdraw their money from SVB and, in response, the bank’s CEO on Thursday urged its clients “not to withdraw their deposits and not to fear or panic”.

But on Friday morning, the listing of SVB shares was suspended on the New York Stock Exchange pending the company’s announcement, after a 60% drop in its headlines on Thursday and another drop of more than 60% on pre-open electronic exchanges.

According to CNBC, the bank was unable to raise the necessary capital and is negotiating to sell it to another bank.

Closely linked to technology companies, SVB is suffering from a worsening sector: a sharp rise in interest rates in the United States affecting a sector heavily dependent on financing for growth, compounded by semiconductor supply difficulties and weak investor appetite for tech stocks, mark the end of tech euphoria after pandemics.

The market capitalization of tech companies has collapsed in 2022, and announcements of mass layoffs among Silicon Valley companies have been multiplying for months.

The increase in interest rates decided by the Federal Reserve (the Fed, the central bank) also affects banking institutions.

Banks borrow money in the short term to grant medium and long-term loans, a model that hurts their prospects in a context of high interest rates.