the English branch – Corriere.it also collapses

The closure of Silicon Valley Bank, the bank whose clients, as its name implies, were most of California’s technology companies financed by venture capital firms, could have a heavy impact on the ecosystem of high-tech start-ups, because many of these companies need cash to pay salaries and operatesays al Courier Stephane Klecha, co-founder and managing partner of Klecha & Co, a pan-European investment bank specializing in the tech sector. Svb, apart from the English market, had no connections with European companies. But he was a symbol in the ameri technological worlddog. This is why – he foresees, and he is not the only one – the American authorities will seek a different solution to the bankruptcy.

What happened

Svb was not insolvent: it had assets of 209 billion dollars and deposits of about 175 billion,

before the bank run, which resulted in the withdrawal of 42 billion in funds, triggered by the announcement of a capital increase of 2.25 billion, to compensate for the loss of 1.8 billion from the hasty sale of 21 billion bonds for the search for immediate liquidity.

The new Bank of Santa Clara

The Fdic, the federal agency that insures deposits of up to $250,000, has already created a new bank, the National Bank of Santa Clara

, operational from tomorrow to facilitate withdrawals by customers for the insured amount. But according to the Federal Reserve, 93% of deposits were uninsured and hundreds if not thousands of companies would find their funds locked up in the SVB. Approximately 8,500 employees received a 45-day job offer at 1.5 times their salariesor by the Fdci: they will work remotely, with the exception of essential workers and branch employees. Then we’ll see.

The insolvency of the British subsidiary

In Great Britain, where Svb had opened its first branch abroad, the Bank of England has also announced the insolvency procedure for the British subsidiary. The institute has a limited presence in the UK and does not represent a systemic problem in the country’s financial system, the British central bank said. But it would already appeal to competitors: according to press rumors, the Bank of London is reportedly considering making a bailout bid for the UK arm.

The effects on crypto-currencies

On the other hand, the effect on the crypto-currency market is heavier, already under pressure due to the bankruptcy this week of two US banks, including Silvergate. The American Circle revealed on Twitter that $3.3 billion of its $40 billion USD Coin reserves are held in Silicon Valley Bankcausing the value of its cryptocurrency to plummet which dropped its peg to the dollar and prompted Circle to call for an urgent federal bailout for Svb.

What did the bank do?

Silicon Valley Bank (SVB) used deposit money, short-term in nature, to invest in long-term bonds, including US Treasury bonds.

However, the sudden hike in interest rates from zero to 4.5% in the United States inflicted serious losses as the crisis in the tech industry prompted customers (companies, entrepreneurs and workers in the sector) to withdraw cash from deposits . Tomorrow, when the markets reopen, we will understand if the Svb affair has been limited.