Silicon Valley Bank & Signature Bank both went bankrupt unexpectedly.
Banking turbulence in the United States: two big American banks shut down in three days, sending jitters as experts warn of a massive financial crisis.
Silicon Valley Bank (SVB) collapsed and was taken over by regulators just 5 days after Forbes Magazine rated it one of the top banks in the United States. This was owing to the bank's inability to meet depositor withdrawal requests.
Following SVB, the Federal Deposit Insurance Corporation (FDIC) took over Signature Bank, which, according to the New York state Department of Financial Services, had assets worth $110.36 billion and deposits worth $88.59 at the end of last year. Signature was the next casualty of the banking turmoil after SVB.
The failure of two large American banks over the weekend shook stock markets around the world on Monday, raising fears about systemic risks at lenders in the world's strongest economy.
On Monday, HSBC purchased the UK arm of the insolvent Silicon Valley Bank for a symbolic one pound, rescuing a vital lender for British technology start-ups and trying to mitigate the effects from the largest bank failure since Washington Mutual in the 2008 financial crisis.
The decision was made after US authorities took steps to protect deposits and prevent any further contagion from the unforeseen failure of its parent Silicon Valley Bank.
In order to ensure banks have the capacity to meet the needs of all their depositors, the Federal Reserve Board has recently announced it will make additional funding available to eligible depository institutions. According to the regulators, SVB depositors will have access to their uninsured deposits on Monday (US time), and no losses will be covered by taxes.
The California Department of Financial Protection and Innovation (DFPI) took over the bank's operations after it became insolvent as a result of the bank's failure to fulfill withdrawal demands.
President Joe Biden has directed the Treasury Department & his economic advisers to investigate the collapses of Silicon Valley Bank & Signature Bank, and those responsible will be held accountable.