Introduction
-
Silicon Valley Bank (SVB) is a large commercial bank in the United States and the bank with the largest deposits in Silicon Valley, headquartered in California.
-
Listed on NASDAQ in 1988.
-
Focused on lending to technology companies, in addition to taking deposits and making loans , it also operates a venture capital and private equity arm.
Proliferation of bankruptcy
-
Event: On March 9, local time, Silicon Valley Bank suddenly announced that it would sell all of its US$21 billion of marketable securities, and would suffer a loss of US$1.8 billion as a result. It also planned to raise US$2.25 billion through the sale of common stock and preferred stock , so as to avoid liquidity crisis.
-
Triggering panic selling in the market, the stock of its parent company, Silicon Valley Financial Group SVB Financial Group, plunged more than 60% on the same day, and plunged more than 60% again in the pre-market trading of US stocks on the 10th, and then entered a trading suspension.
-
Investors are uneasy about the level of capital and the use of deposits in the banking industry, worrying about the recurrence of the "Lehman crisis".
-
Silicon Valley Bank plummeted and brought down the entire banking sector. The total market value of JPMorgan Chase, Citigroup, Wells Fargo, and Bank of America evaporated by more than US$52 billion that day.
-
Silicon Valley Bank's liquidity crisis sparked a run. Investors and depositors reportedly tried to withdraw $42 billion from Silicon Valley Bank on Thursday, in one of the largest U.S. bank runs in more than a decade.
-
On March 10, the regulator, the California Department of Financial Protection and Innovation, shut down , citing illiquidity and insolvency , and bank deposits were taken over by the Federal Deposit Insurance Corporation (FDIC). The collapse of Silicon Valley Bank was the largest bank failure since the 2008 financial crisis and the second-largest in U.S. history.
-
The Silicon Valley Bank mine explosion incident spread panic in the market. The three major U.S. stock indexes all fell by more than 1%, and the banking sector fell into a huge shock. The key index tracking the performance of U.S. listed banks, the KBW Bank Index, fell 3.91% .
analyze
-
Behind the liquidity crisis of Silicon Valley banks, "term mismatch" is the root problem, and the Fed's interest rate hike is the fuse.
-
During the period of loose liquidity, a large number of low-cost deposits were absorbed and long-term bond assets were allocated , resulting in a substantial increase in potential interest rate risks , and the Fed's interest rate hike exposed Silicon Valley Bank's problems.
-
Due to the release of water by the Federal Reserve during the epidemic, the rapid expansion of the PE/VC market in the United States has brought a large amount of low-interest deposits to Silicon Valley Bank, which has led to the rapid growth of Silicon Valley Bank . In 2022, with the Federal Reserve raising interest rates sharply, the low interest rate environment will suddenly reverse, and Silicon Valley Bank will face tremendous pressure.
-
In order to obtain higher interest rate income , Silicon Valley Bank used the funds absorbed by low interest rates for investment , and allocated a large number of long-term held-to-maturity assets and available-for-sale assets on the asset side , resulting in serious maturity mismatches. Huge interest rate risk.
-
In the context of rising interest rates, the value of these assets has shrunk significantly, and investment returns are generally low .
think
With the Federal Reserve’s aggressive interest rate hikes as the fuse, the crisis of Silicon Valley Bank was exposed, which not only caused a “huge shock” in the U.S. banking sector as a whole, but also triggered an emotional crisis in the market: the market is worried that under the influence of the Fed’s continued interest rate hikes, , Silicon Valley Bank may be just the first domino to fall, and more worried, will the US banking crisis trigger the US financial tsunami again?