So, I was just a few hours early then about SIVB:
Silicon Valley Bank – just an old fashioned bank run?
Banking is a confidence trick and when the confidence is lost so is the bank. Perhaps that’s the lesson for us here at Silicon Valley Bank?
That was at 8.40 am today.
NYT at 5.36 UK time today:
Silicon Valley Bank, a lender to some of the biggest names in the technology world, did just that on Friday, becoming the largest bank to fail since the 2008 financial crisis. The move put nearly $175 billion in customer deposits, including money from some of the biggest names in the technology world, under the control of the Federal Deposit Insurance Corporation.
Straight old bank run. I even got the why correct:
However, that then still leaves the possibility of a run. The usual cure for a run is deposit insurance, which the US does indeed have. But such deposit insurance only holds for accounts up to a certain value ($250k in the US we believe). And if the bank’s deposit base is largely from corporate entities then average deposit balances are going to be rather larger than that. Which means that the larger depositors are uncovered.
And yes, they were largely corporate customers:
But for customers with deposits totaling more than $250,000, the news was grim. Customers with accounts that surpassed that amount — the maximum covered by F.D.I.C. insurance — would be given certificates for their uninsured funds, meaning they would be among the first in line to be paid back — though potentially only partially — with funds recovered while the F.D.I.C. holds Silicon Valley Bank in receivership.