Silicon Valley Bank (SVB) was founded in 1983 in California and in little time it became one of the biggest banks in the world. In 2021 the bank managed half of the founds that were used for financing startups. SVB used money that these companies deposited to invest them in bonds. But the flow of new deposits started to slow down, so clients started to withdraw their founds. On 8th March things got worse, in fact SVB Financial Group, a branch of the bank, sold its titles for 21 billion dollars. This announce scared clients, so they started to make significant withdrawals, event called ‘bank run’.
On 11th March the government decided to close the bank to protect account owners. According to analysts, the collapse of the bank was this fast, due to the strong exposure on only one sector. This was the second largest liquidation of American banks since 2008 and it had a huge impact on stock markets of the whole world.
As in 2008, the responsibility was attributed to the mistakes of the Federal Reserve, the US’ central bank, but this situation is different from the 2008 one. In fact, interest rates were positives between 2006 and 2007, instead since 2021 the rates have been negatives.
In Europe, only Credit Suisse had hardships, due to their previous difficulties. The European banking system has a solid position in terms of capital, and it’s provided with substantial reserves to cover possible losses.