The collapse of Silicon Valley Bank (SVB) and the SignatureBank it has caused fear and distrust in many American clients, who are withdrawing their funds from medium-sized banks to deposit them in larger ones that would have a better chance of being rescued by the US State in the event of bankruptcy.
This situation has generated the rapid reaction of the main institutions, such as the Federal Reserve (Fed), the US Treasury and the Federal Deposit Insurance Corporation (FDIC), which established measures to ensure that their customers could access their deposits.
According to Janet YellenSecretary of the Treasury of the United States, the outflows of funds in regional banks have “stabilized” and “the US banking system remains strong”he stated during his last speech before the Bankers Association of the United States.
In addition, he said that the circumstances at this time cannot be compared with the global financial crisis that took place in 2008, because the market is currently “significantly stronger.”
In order to avoid contagion and prolongation of the financial crisis, 11 North American banks, including the Bank of America, JPMorgan Chase and the Citigroupannounced that they were going to inject US$30,000 million into the First Republic, whose shares, during this day, have shot up 23%.
Silicon Valley was one of the biggest banks for tech companies. Photo: diffusion.
For its part, as part of an emergency bailout to ensure financial stability and protect the Swiss economy, UBS Group AG (UBS), one of the largest Swiss banks, decided to acquire its rival, the Credit Suisse (CS), for US$ 3,000 million.
Fed would not raise its rates
Given the banking uncertainty, the Fed would be considering, and will debate for two days, the possibility of pausing the rate hike in its interest rates. This increase would be the ninth since last March, when they began to be given to combat inflation in the country, which in February stood at 6%, one of the lowest registered since 2021. Thus, according to the media MarketWatchthe probabilities that the entity rises by 0.25 points are 70%, while 30% would indicate that they would remain without any movement.
Guard. The SVB’s parent company, Silicon Valley Bank Financial Group, filed for bankruptcy in order to obtain the capital restructuring of the intervened businessesespecially from SVB Capital and SVB Securities.
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