Silicon Valley Bank: What was it and why did it fail?

THe Federal Deposit Insurance Corporation Friday, they announced that they had California-based Silicon Valley Bank has been closedThe 16th largest federally insured bank in the nation is.

All of its assets were moved to the new Deposit Insurance National Bank of Santa Clara. SVB had 17 branches in California and Massachusetts before the closing. The bank had approximately $209 billion in total assets at the end of last year and $175.4 billion total deposits.

REGULATORS BANK SILICON VALLEY BANK DOWN IN MOST NOTABLE FAILURES SINCE 2008 CRISIS

SVB’s collapse is the largest bank failure since the 2008 financial crisisThis is notable, as it was performing well until very recently.

What was Silicon Valley Bank?

SVB was a bank that only had venture capital firms and startups as clients. Due to major cash deposits from booming companies, SVB was able to achieve financial stardom during COVID-19. Its deposits grew from $60 billion in quarter one 2020 to more than $200 Billion in the third quarter 2022. Wall Street Journal reported. Its securities portfolio increased from approximately $27 billion during 2020’s first trimestre to around $127 billion by the end of 2021.

The fact that most of SVB’s assets were seemingly secure — they were mainly longer-term government bonds — led many investors to feel the bank was secure. In just two days, those feelings would be shattered. The bank abruptly announced Wednesday that it needed more than $2.2 billion to fund its business, sending its stock plummeting more than 60% in just a few days.

What caused the bank to fail?

The government se