Chinanews.com, March 15th (Chinanews Finance and Economics Wu Jiaju) On March 10th, Silicon Valley Bank, with assets exceeding US$200 billion, was taken over by the U.S. Federal Deposit Insurance Corporation (FDIC) and declared bankrupt, which aroused widespread concern around the world.
In this storm, who is the biggest victim?
Silicon Valley Bank: Will not be bailed out by U.S. government
As the 16th largest bank in the United States, will Silicon Valley Bank disappear from now on?
US Treasury Secretary Janet Yellen said in an interview on the 12th that the US government hopes to avoid the financial "contagion" caused by the collapse of Silicon Valley Bank, but ruled out the possibility of bailing out Silicon Valley Bank.
Bloomberg reported on the 12th that the FDIC launched the auction process for Silicon Valley Bank on the 11th.
Is the collapse of Silicon Valley Bank an isolated case or a systemic risk?
According to media reports, recently, in addition to Silicon Valley Bank, Silvergate Bank and Signature Bank in the United States have also gone bankrupt.
Lu Zhengwei, Chief Economist of Industrial Bank, said that in the future, if the Federal Reserve continues to tighten monetary policy and the growth rate of deposits continues to decline, other banks may be forced to sell bonds, which will erode profits and capital, similar to Silicon Valley Bank.
"Among them, some small and medium-sized banks with relatively poor deposit stability may be more prone to risks."
In the eyes of some banking analysts, the bankruptcy of Silicon Valley Bank will not lead to the "spread" of instability in the banking industry.
Morgan Stanley analysts Manan Gosalia and Betsy Graseck said in a note that Silicon Valley Bank's problems appear to be "very idiosyncratic and should not be viewed as an interpretation of other banks of concern," NBC reported.
On March 13, local time, customers waited in line in front of the headquarters of Silicon Valley Bank in Santa Clara, California, to handle business.
Photo by China News Agency reporter Liu Guanguan
Silicon Valley Bank shareholders: Not in receivership
If Silicon Valley Bank Fails, What Will Shareholders Do?
According to the FDIC website, SVB Financial Group owns all of SVB's shares, and the company is not included in the bank's closure or resulting receivership.
"If you are a shareholder, please do not contact the receiver or make a claim against the receiver. You must contact the holding company directly for more information."
Who are the shareholders of Silicon Valley Bank Financial Group?
According to the data, as of the end of 2022, a total of 528 institutional investors hold shares in Silicon Valley Bank, with a combined market value of US$10.954 billion.
Among them, Vanguard Group, the world's largest public fund, holds the largest number of shares, with a market value of US$1.532 billion.
Well-known global investment institutions such as BlackRock, JPMorgan Chase, and Invesco also hold a large number of SVB stocks. There are 28 institutional investors holding SVB with a market value exceeding US$100 million.
According to the CNN Business website, the current total market value of Silicon Valley Bank Financial Group is about 6.3 billion US dollars. Among its ownership, mutual funds account for 53.74%, other institutions account for 45.23%, and individual stakeholders account for 1.61%.
At present, the top ten shareholders include: Vanguard Group (10.85%), State Street Fund (5.22%), BlackRock Fund (5.18%), pension fund Alecta (4.46%), JPMorgan Chase (3.67%), etc.
Picture from CNN Business website
According to the European investment magazine "IPE", as the fourth largest shareholder of Silicon Valley Bank, Alecta, Sweden's largest pension fund, issued a statement on the 13th. Before the collapse of Silicon Valley Bank, its total investment in Silicon Valley Bank had reached SEK 8.9 billion.
In addition to Silicon Valley Bank, Alecta also invested in Signature Bank and First Republic Bank, and its total losses on the three banks amounted to SEK 14.5 billion (EUR 1.27 billion).
Alect acknowledged that it wrote down its holdings in Silicon Valley Bank and Signature Bank to zero after the FDIC took over the two banks, resulting in a total capital loss of about 1%.
In addition, the CNN Business website shows that the top ten mutual funds that currently hold Silicon Valley Bank Financial Group include: Vanguard Total Stock Market Index (3.07%), Vanguard Mid-Cap Index Fund (2.33%), Vanguard 500 Index Fund (2.32%), JP Morgan Large-Cap Growth Fund (1.94%), Fidelity 500 Index Fund (1.09%), etc.
Picture from CNN Business website
Depositors: some have arrived and some have not.
Can the depositor's money still be withdrawn?
As of the end of 2022, Silicon Valley Bank's total assets will be approximately US$209 billion, and total deposits will be approximately US$175.4 billion.
According to Silicon Valley Bank, its customers are in various fields, such as: Andreessen Horowitz (venture capital firm), Insight Partners (venture capital firm), Payoneer (financial services firm), CrowdStrike (information security firm), shopify (e-commerce software developer) , Pivot Energy (solar energy provider), SOURCE (renewable drinking water technology company), Tableau (software company), Teladoc (telemedicine company), ZipRecruiter (job site), etc.
According to reports, Silicon Valley Bank depositors include a large number of start-up companies.
After Silicon Valley Bank declared bankruptcy on the 10th, many technology start-ups in the United States that were closely related to it fell into tension and chaos.
Gary Tann, CEO of startup incubator Y Combinator, previously predicted that an "extinction-level event" may occur in the US technology sector.
"If the government doesn't step in, I think a whole generation of start-ups will disappear from the face of the earth."
Picture from the official website of Silicon Valley Bank
Although the US government then stepped in and announced that it would take action to shore up deposits, there is still uncertainty about whether depositors will be able to withdraw successfully.
On March 12, local time, the U.S. Treasury Department, the Federal Reserve, and the FDIC issued a joint statement: Starting from the 13th, depositors can withdraw all their funds.
At the same time, the Federal Reserve announced a new bank term financing plan, which will provide loans to eligible savings institutions to ensure that the latter has the ability to meet the needs of depositors in the context of the bankruptcy of Silicon Valley Bank.
According to the statement, the US Treasury Department will also allocate 25 billion US dollars from the Exchange Stabilization Fund to support the above-mentioned financing plan.
In his speech on the 13th, US President Biden emphasized that the losses related to the US government's involvement in Silicon Valley Bank will not be borne by taxpayers.
But according to a CNN report on the 14th, some people have expressed doubts about the statement. Democratic Senator Elizabeth Warren of Massachusetts wrote in an op-ed on the 13th, "We'll see if it's true."
More immediately, there is uncertainty about how long it will take companies to get their money out of SVB.
Stephen Kalb, CEO of US start-up Shelf Engine, said that as of the 14th, the funds in his Silicon Valley bank account had not been transferred to the previously opened JPMorgan Chase account.
"I've been obsessively checking my email," he said.
"Hopefully the money will be transferred as soon as possible."
Ben Kaufman, co-founder of toy store and online retailer Camp, said in an interview on the 13th that he and his team had been trying to "fight for survival" all weekend.
"We don't know how long it will take to get the cash out...," he said, noting that the bank owns 85 percent of his company's assets.
On the 14th, a number of Chinese listed companies such as Jiu'an Medical and Kanglong Chemical announced that all deposits in Silicon Valley Bank have been withdrawn.
Zhang Ming, deputy director of the Institute of Finance of the Chinese Academy of Social Sciences and deputy director of the National Finance and Development Laboratory, believes that the Silicon Valley Bank incident has had a certain negative impact on the US venture capital system and technology start-ups.
The bankruptcy of Silicon Valley Bank may affect many well-known companies.
According to NBC reports, Silicon Valley Bank's customers include some well-known companies in the consumer technology field, such as: Airbnb (homestay booking platform), Cisco (network solution provider), Fitbit (consumer electronics and fitness companies), Pinterest (social networking site ) and Square (the mobile payment company).
Reuters reported on the 13th that in addition to various credit loans, American companies disclosed deposits of more than US$4 billion in Silicon Valley Bank.
Among them, the stable currency giant Circle stated that of the company's USD Coin reserves of approximately USD 40 billion, USD 3.3 billion is in Silicon Valley Bank.
Streaming service Roku said it has about $487 million in deposits with Silicon Valley Bank, or 26% of its cash and cash equivalents.
"Metaverse's first stock" Roblox said that 5% of its $3 billion in cash is deposited in Silicon Valley Bank.
In Europe, about 16 technology and life sciences companies disclosed their exposure to Silicon Valley Bank of the United States and the UK subsidiary of Silicon Valley Bank of approximately US$190 million.
Among them, Trustpilot, a Danish e-commerce review service website, stated that it has US$36 million stored in the UK subsidiary of Silicon Valley Bank, and currently US$18 million has been transferred from the bank, but it has yet to be confirmed.
Diaceutics said most of its £22.2m cash was in SVB and was trying to move the cash before SVB closed, but the deal was still in progress.
On March 13, local time, customers waited in line in front of the headquarters of Silicon Valley Bank in Santa Clara, California, to handle business.
Photo by China News Agency reporter Liu Guanguan
Stock Market Investors: U.S. Bank Stocks Consecutively Slump, Market Value Shrinks
The bankruptcy of Silicon Valley Bank has also spread to the US stock market.
On March 10 (Friday), local time, the three major U.S. stock indexes collectively closed down. The Dow fell 1.07%, falling below the integer mark of 32,000 points; the Nasdaq fell nearly 200 points, or 1.76%; the S&P 500 fell 1.45%.
Stocks in the U.S. banking industry collectively plunged. The stock prices of the four major banks of JPMorgan Chase, Bank of America, Wells Fargo and Citigroup plummeted, and their total market value evaporated by about 50 billion U.S. dollars.
On March 13 (Monday), the U.S. stock banking sector continued to plummet. The stock price of First Republic Bank of the United States once fell by 78%, Alliance Western Bank once plummeted by more than 80%, and Westpac Bank fell by 60%.
According to NBC, on the 10th, JPMorgan Chase analyst Vivek Juneja said in a report, "We think (banking stocks) sell-off is overdone, because big banks have more liquidity than small banks, they are more diversified, It has a broader business model, it has a lot of capital, it's better managed in terms of risk, and it has a lot of regulatory oversight."
According to Reuters, bank failures in Silicon Valley have triggered turmoil in European stock markets.
On the 13th, the European Stoxx 50 Index, the British FTSE 100 Index, and the German DAX Index all fell.
Many bank stocks also fell sharply, and Credit Suisse fell more than 15% at one point.
The bankruptcy of Silicon Valley Bank also triggered speculation about a second "Lehman" and a financial crisis. Wen Bin, chief economist of China Minsheng Bank, believes that the two are not the same.
First, Silicon Valley Bank is much smaller than Lehman Brothers.
Second, Silicon Valley Bank's underlying assets are relatively healthy.
Third, U.S. financial regulation is more stable.
Wen Bin said that the liquidity risks brought about by the continuous interest rate hikes in the United States and Europe still need attention, and the pace of subsequent interest rate hikes may be adjusted.
(over)