US regulators close Silicon Valley Bank and will protect its deposits, but the fall drags down Wall Street
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US regulators close Silicon Valley Bank and will protect its deposits, but the fall drags down Wall Street

-European banks fall dragged by the shock wave of Silicon Valley Bank.

United States financial regulators announced this Friday the closure of the Silicon Valley Bank (SVB) due to lack of liquidity and insolvency and announced measures to guarantee the protection of all its insured deposits.

The California Department of Financial Protection, where the entity is based, explained in a statement that it has taken possession of SVB and has transferred the management of its assets to the Federal Deposit Insurance Corporation (FDIC).

The FDIC, in another note, announced that it has taken steps to protect deposits and that all customers with insured funds will have full access to them no later than next Monday.

Those who have deposits not guaranteed by the federal authorities, the FDIC will pay them a dividend next week and will receive a certificate for the rest of their funds, which will be returned as the bank’s assets are sold.

Accounts with more than $250,000

The FDIC, which is the fund that guarantees bank deposits in the United States, asks SVB clients to contact it if they have accounts with more than $250,000, the standard insured amount in the country.

The authorities have also created an entity heir to SVB that will resume the bank’s activities, at the latest next Monday, to guarantee customer service, access to funds or the payment of checks.

According to FDIC data, Silicon Valley Bank had 17 branches in the states of California and Massachusetts and at the end of 2022 it had assets worth about $209 billion and about $175.4 billion in deposits.

Losses on Wall Street

The bank, which specializes in serving emerging companies, announced on Wednesday that it was going to seek a capital increase to try to address its financial difficulties, which had led it to divest investments worth about $21 billion, with a loss of about 1.8 billion.

That announcement led many clients to withdraw their funds and sank the company’s stock price, which in turn affected the banking sector in general, both in the United States and in other countries.

Wall Street, which this Friday had opened in the red but then recovered, fell back to losses with the news of the closure of SVB by regulators.

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