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<ul><li><keyword id="6358584" type="General" weightage="20" keywordseo="hsbc" source="Orion">HSBC</keyword> says that the transaction 'completes immediately' and will be funded from existing resources.</li><li>The UK central bank said the deal will ensure the continuity of banking services, minimise disruption to the UK technology sector. </li></ul> HSBC UK Bank plc is acquiring Silicon Valley Bank UK Limited (SVB UK) for 1 pound, after a weekend of frantic negotiations by UK officials. In a statement, HSBC says the transaction "completes immediately". The acquisition will be funded from existing resources, the Guardian reported. "As at 10 March 2023, SVB UK had loans of around 5.5 billion pounds and deposits of around 6.7 billion pounds. For the financial year ending December 31, 2022, SVB UK recorded a profit before tax of 88 million pounds. SVB UK's tangible equity is expected to be around 1.4 billion pounds. Final calculation of the gain arising from the acquisition will be provided in due course," HSBC said. The sale to HSBC has been taken to "stabilise SVBUK", says the Bank of England. The UK central bank says the deal will ensure the continuity of banking services, minimise disruption to the UK technology sector and support confidence in the financial system, the Guardian reported. Importantly, the Bank of England and HM Treasury can confirm that all depositors' money with SVBUK is safe and secure as a result of this transaction. That will be a massive relief for tech companies, who feared an �existential threat' to their businesses if they had lost their funds at SVB UK, the Guardian reported. The BoE add that the deal with HSBC means SVB UK will not now be put into insolvency. It says, "SVBUK's business will continue to be operated normally by SVBUK. All services will continue to operate as normal and customers should not notice any changes".

HSBC acquires UK arm of Silicon Valley Bank for £1

<ul class="summary-list"><li>The federal government is bailing out Silicon Valley Bank's customers.</li><li>But it's not a repeat of the 2008 financial crisis, when the government stepped in to support the US banking system.</li></ul>The US government is bailing out a bank's customers — but that doesn't mean <a href="https://www.businessinsider.com/us-bailout-success-2012-9">another Great Recession</a> is imminent. On Sunday, the US Treasury, Federal Reserve Board, and the <a href="https://www.businessinsider.com/personal-finance/what-is-fdic-insurance">Financial Deposit Insurance Corporation</a> announced they would "fully protect" all depositors with funds in <a href="https://www.businessinsider.com/silicon-valley-bank-failure-what-happened-bank-run-explained-2023-3">Silicon Valley Bank</a>. The news came after the <a href="https://markets.businessinsider.com/news/stocks/silicon-valley-bank-failure-fdic-wall-street-regulator-finance-investing-2023-3?_gl=1*2xbrt9*_ga*NDIxNTc4OTkyLjE2NzcwODI0ODE.*_ga_E21CV80ZCZ*MTY3ODcxNjgxNi40OS4xLjE2Nzg3MTc1NTcuMC4wLjA.">institution was shut down last Friday</a>, and experts raised concerns that inaction could spur wider <a href="https://www.businessinsider.com/mark-cuban-calls-federal-reserve-buy-silicon-valley-bank-debt-2023-3">turmoil in the banking industry</a>.In recent days, many have drawn comparisons to the <a href="https://www.businessinsider.com/personal-finance/what-caused-the-great-recession">2008 financial crisis</a>, when the federal government doled out roughly <a href="https://money.cnn.com/news/specials/storysupplement/bankbailout/" target="_blank" rel="noopener">$200 billion to hundreds of banks</a> to support the US banking system. The size of SVB's bank failure has only been surpassed once in American history — by <a href="https://www.nytimes.com/interactive/2023/03/10/business/bank-failures-silicon-valley-collapse.html" target="_blank" rel="noopener">Washington Mutual</a> when it collapsed in 2008. The '08 crisis laid the groundwork for the <a href="https://www.businessinsider.com/how-the-great-recession-affected-millennials-2019-8">Great Recession</a> — when millions of Americans lost their jobs and the unemployment rate peaked at nearly 10%. But today's landscape is very different than a decade-and-a-half ago. While the banking industry might not be <a href="https://markets.businessinsider.com/news/stocks/silicon-valley-bank-svb-live-blog-fed-fdic-bailout-experts-2023-3">out of the woods just yet</a>, there's a good chance it — along with the broader US economy — will be just fine. Here are four reasons why. <h2>The US has stricter banking regulations today</h2>After the 2008 crisis, US banks were strapped with stricter regulations to help ensure the industry would avoid a similar fallout in the future. This included <a href="https://markets.businessinsider.com/news/stocks/treasury-sec-mnuchin-open-to-relaxing-financial-crisis-bank-laws-2019-10-1028641183">raising capital requirements</a>, which was intended to ensure banks had adequate reserve levels during times of crisis. Rules were also put in place to make sure institutions had <a href="https://www.nytimes.com/interactive/2023/03/10/business/bank-failures-silicon-valley-collapse.html" target="_blank" rel="noopener">well-diversified revenue streams</a>. A bank of SVB's size was not subject to the same level of regulations — in part due to a law <a href="https://www.businessinsider.com/silicon-valley-bank-bernie-sanders-donald-trump-blame-2023-3">passed during the Trump administration</a> — which some, like Sen. Bernie Sanders, have <a href="https://www.businessinsider.com/silicon-valley-bank-bernie-sanders-donald-trump-blame-2023-3">blamed for the bank's collapse</a>. However, these <a href="https://www.businessinsider.com/silicon-valley-bank-bernie-sanders-donald-trump-blame-2023-3">regulations still apply</a> to roughly the twelve biggest US banks — those that have at least $250 billion in assets — and should help make a 2008-style failure less likely. <h2>The federal government acted quickly to squash the crisis</h2>In announcing SVB's depositors would <a href="https://www.businessinsider.com/us-government-bails-out-silicon-valley-bank-depositors-fdic-2023-3">receive full deposit protection</a>, the federal government took steps to minimize impacts to the wider banking industry. It also announced that depositors from a second institution, Signature Bank, that was <a href="https://www.businessinsider.com/us-government-bails-out-silicon-valley-bank-depositors-fdic-2023-3">shut down on Sunday</a>, would receive the same protection.If these actions are successful, they will help prevent the need for <a href="https://markets.businessinsider.com/news/stocks/silicon-valley-bank-svb-live-blog-fed-fdic-bailout-experts-2023-3">additional bank bailouts</a> by reducing the odds of more runs starting at similarly-sized banks. "By insuring all deposits at SVB and Signature, regulators judged the risk of cascading effects to other regional banks and the broader economy to be more significant than the moral hazard of increasing FDIC limits," Rich Falk-Wallace, CEO of data analytics firm Arcana and a former portfolio manager at hedge fund Citadel, <a href="https://www.businessinsider.com/signature-svb-us-banks-have-over-1-trillion-uninsured-deposits-2023-3">told Insider Sunday</a>. <h2>The bigger banks will be just fine</h2>While SVB had <a href="https://www.nytimes.com/interactive/2023/03/10/business/bank-failures-silicon-valley-collapse.html" target="_blank" rel="noopener">$209 billion in assets</a> at the end of last year, making it the 16th-largest US bank, it's not large enough to fuel a widespread banking crisis all by itself. The country's four largest banks — JPMorgan Chase, Bank of America, Citibank, and Wells Fargo, each have over $1 trillion in assets. And compared to SVB, which <a href="https://markets.businessinsider.com/news/stocks/tech-sector-faces-historic-black-eye-moment-analyst-sees-major-ripple-impacts-following-svb-implosion-1032162732">relied heavily on tech startups for deposits</a> over the past decades, these banks' business models are much more diversified. Given their strong financial standing, some of the US' biggest banks might help clean up the mess as well. Regulators are currently looking for an institution to <a href="https://africa.businessinsider.com/news/control-of-silicon-valley-bank-up-for-auction-as-federal-officials-weigh-protecting/k00q0ex" target="_blank" rel="noopener">purchase SVB's assets</a>."Still to be determined is the fate of the assets of Silicon Valley Bank," Greg McBride, chief financial analyst at Bankrate, said in a statement. "Whether one buyer, or multiple buyers, emerge is still to be determined as of the moment."<h2>The stock market is hanging in there </h2>As of early Monday afternoon, the <a href="https://markets.businessinsider.com/index/s&amp;p_500">S&amp;P 500 is slightly positive on the day</a>, suggesting investors aren't overly concerned about SVB's collapse wrecking further havoc — though <a href="https://africa.businessinsider.com/markets/bank-stocks-are-continuing-to-plunge-amid-svb-fallout-and-biden-declaring-investors/3px1h7w">bank stocks have continued to struggle</a>. While the <a href="https://www.businessinsider.com/charts-showing-that-stock-market-is-not-the-us-economy-2015-10">economy and markets aren't the same thing</a>, a struggling market can be a negative leading indicator for a weakening economy.If the <a href="https://markets.businessinsider.com/news/stocks/recession-warning-bank-of-america-brian-moynihan-us-economy-outlook-2023-3">US economy does enter a recession</a> as some experts expect, SVB's failure is unlikely to be the reason why.

Relax, SVB's implosion is nothing like the 2008 financial crisis, and the economy will be fine

Washington, US President Joe Biden has assured the American people and businesses that a resolution of the collapse of the <keyword id="630197" type="General" weightage="80" keywordseo="silicon-valley-bank" source="Orion">Silicon Valley Bank</keyword> will not put taxpayer's money at risk, and they can have confidence that their bank deposits would be there when they need it. In a late-night statement on Sunday, Biden also announced that on Monday morning he will deliver remarks on how the US will maintain a resilient banking system to protect the economic recovery. The California-based Silicon Valley Bank (SVB), the 16th largest bank in the United States, was closed on Friday by the California Department of Financial Protection and Innovation which later appointed the Federal Deposit Insurance Corporation (FDIC) as its receiver. Industry watchers expect a quick takeover of the bank as it has enough assets that can be liquidated to return money to the clients. Biden said that at his direction the Treasury Secretary and National Economic Council Director worked diligently with the banking regulators to address problems at SVB and Signature Bank. "I am pleased that they reached a prompt solution that protects American workers and small businesses, and keeps our financial system safe. The solution also ensures that taxpayer dollars are not put at risk. The American people and American businesses can have confidence that their bank deposits will be there when they need them," Biden said. "I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again," he added. Hours earlier, Treasury Secretary Janet Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. "Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of SVB will be borne by the taxpayer," said a joint statement issued by the Department of the Treasury, Federal Reserve, and FDIC. "We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of SVB, no losses will be borne by the taxpayer," it said. According to the interagency federal statement, shareholders and certain unsecured debt holders will not be protected. "Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law," it said. The Federal Reserve Board on Sunday announced it would make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. This step will ensure that the US banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth, the statement further said. Senator Mark Warner, a member of the Senate Banking Committee, said after an unprecedented and reckless run on Silicon Valley Bank, there were very real risks of instability spreading to other institutions and undermining our national security and technology innovation ecosystem. "The Federal Reserve, the FDIC, and the Treasury Department have together acted as Congress intended when we wrote Dodd-Frank by acting swiftly and responsibly to protect depositors and make sure that our financial system remains stable, while at the same time making clear that bank shareholders and bondholders shouldn't expect any kind of bailout by the taxpayers. Their quick action will help companies make payroll and preserve jobs all across the country," he said. California Governor Gavin Newsom said that the Biden Administration has acted swiftly and decisively to protect the American economy and strengthen public confidence in our banking system. "Their actions this weekend have calmed nerves, and had profoundly positive impacts on California - on our small businesses that can now make payroll, workers who will get their paychecks, on affordable housing projects that can continue construction, and on non-profits that can keep their doors open tomorrow," he said. "California is a pillar of the American economy, and federal leaders did the right thing, ensuring our innovation economy can continue to grow and move forward," Newsom said. Silicon Valley Bank was deeply entrenched in the tech startup scene and the default bank for many high-flying startups; its abrupt fall marks one of the largest bank failures since the 2008 global financial crisis. The bank failed after clients -- many of them venture capital firms and VC-backed companies that the bank had cultivated over time -- began pulling out their deposits, creating a run on the bank (among the biggest US bank runs in more than a decade). Bank runs occur when customers or investors gripped by panic start withdrawing their money, causing the bank to be incapable of paying its obligations as they come due. Silicon Valley Bank's abrupt collapse last week has left Silicon Valley entrepreneurs unnerved and jittery. Federal Deposit Insurance Corporation on Friday seized the assets of Silicon Valley Bank -- the action reportedly in the middle of the business day highlighted the severity of the situation.

SVB solution ensures taxpayer dollars are not put at risk: President Biden

<ul class="summary-list"><li>The fall of Silicon Valley Bank was the fastest in history, largely due to Twitter-induced panic.</li><li>Many VCs and founders stoked panic on the platform, later deciding to delete their posts.</li></ul>There's a good chance the run on <a href="https://www.businessinsider.com/svb-failure-what-the-hell-happened-2023-3">Silicon Valley Bank</a> would not have happened had it not been for social media. <a href="https://www.businessinsider.com/personal-finance/is-money-safe-in-bank-during-recession">Bank runs</a> have happened before, but this collapse was a new tech-fueled phenomenon that shocked the banking industry, regulators and most other experts.Anxiety in the tech community quickly escalated through social media, mainly Twitter. "SVB" was tweeted about roughly 200,000 times on Thursday, with several founders and CEOs of tech companies posting about pulling money from the bank. Tech luminaries, the very people SVB banked for so many years, <a href="https://www.businessinsider.com/svb-silicon-valley-bank-startups-worry-run-pull-accounts-2023-3">just couldn't help themselves.</a>"OK i am hearing from dozens of founders about what to do at SVB. It's an all out bank run," founder Howard Lerman <a href="https://twitter.com/howard/status/1633908101534367746?cxt=HHwWhIC2ud6w56wtAAAA" target="_blank" rel="noopener noreferrer">tweeted</a> on Thursday when SVB was trying to raise new capital. "The thing about a bank run is that there's no upside to keeping your money in the at-risk bank," <a href="https://twitter.com/XavierHelgesen/status/1633932727102902272?s=20" target="_blank" rel="noopener">wrote</a> Xavier Helgesen of Enduring Ventures the same day. By Friday, depositors had tried to withdraw $42 billion from SVB. The bank was shut down by regulators and taken over by the <a href="https://www.businessinsider.com/personal-finance/fdic">FDIC</a>.Never before has a <a href="https://www.businessinsider.com/svb-decimated-24-hours-digital-banking-trump-regulatory-rollbacks-2023-3">bank collapsed so fast</a>, according to Tom Vartanian, author of "200 Years of American Financial Panics" who was general counsel of the Federal Home Loan Bank Board during the Savings and Loan crisis of the late 1980s."The rapidity of the crisis and social media has taught us that tech is obsoleting the current regulatory structure, which was built in the 1930s," he said. "The whole system needs to be looked at differently in a tech-adroit environment."<h2>'Stacking cash on the teller windows'</h2>During the Saving &amp; Loan crisis, there was, of course, a "loss of confidence" that led to a "panic" among depositors, but it spread over the course of weeks, not hours. That helped regulators and government workers quell fears and actively work to stop runs, Vartanian recalled."When we were closing saving and loan banks, to stop runs, we used to have banks stacking cash on the teller windows, so people could see it, to deal with the psychological factor of it," Vartanian said. "What would often happen is people would see that, and they'd still get in line and take out the money, but they put it right back. It was the fact of getting it that calmed them down."Such palliative action no longer seems feasible considering "information is now so immediate, disinformation, too, can be transmitted instantaneously," Vartanian added. The irony is that the very investors and founders who were most exposed to SVB were the ones who quickly stirred up the panic that led to the failure."Our industry has shot itself in the foot," said Mark Suster, a venture capitalist who's <a href="https://www.businessinsider.com/founders-call-for-calm-silicon-valley-banks-stock-price-plummets-2023-3">call for calm on Thursday</a> went mostly unheeded. <h2>Deleted tweets</h2>Siqui Chen, founder and CEO of Runway, a financial software startup, deleted some of his tweets about SVB, admitting on Monday that "fanning the flames of a bank run is a bad look for everybody and I don't want to be a contributor."A little late. Grant Brooke is another founder who deleted Thursday tweets about SVB, although he has not explained why. One deleted tweet reads, "At this point SVB has hours to arrange an acquisition - as a founder it's your duty to your employees and investors to limit your exposure." Another deleted tweet says, "As one of probably the few founders to go through a modern bank run, get your money out now. They have to say that everything is ok. If you don't have another bank account as your investor to warehouse money in their non-SVB accounts."Some tech types who banked with SVB have even deleted tweets they put out in support of the bank. Jason Lemkin, a VC and advisor, tweeted Thursday "keeping our $13m at SVB. That's all." The following day the post was deleted and he said in response to CNBC anchor Stephanie Rhule, who noted the deletion: "I was very wrong."<h2>'MONDAY, BLOODY MONDAY'</h2>Meanwhile, Jason Calcanis and David Sacks, tech founders turned investors, have been tweeting about little but SVB since Thursday. By Friday, Calcanis called the situation "DEFCON 1" and that the bank needed to be bailed out."ON MONDAY 100,000 AMERICANS WILL BE LINED UP AT THEIR REGIONAL BANK DEMANDING THEIR MONEY – MOST WILL NOT GET IT," he wrote, calling March 13 "MONDAY, BLOODY MONDAY."When Vivek Ramaswamy, an entrepreneur and conservative activist, noted on Sunday that VCs and some founders seemed to be "going out of their way to push a narrative there will be a bank run on Monday," he drew an angry response from Sacks. "Faux populist psychopath simultaneously opposes responsible measures to prevent a banking crisis while pre-announcing that he plans to blame the ensuing chaos on those of us who tried to avoid it. Keep this guy as far away from the Oval Office as possible," Sacks wrote.<h2>Rewriting the panic</h2>That tweet is another to have since been deleted. However, the attempt to rewrite the panic of the last four days continues.Chen, the founder who deleted earlier tweets about SVB, took to Twitter again Monday to say that the histrionics of Calcanis and Sacks actually served to "prevent a massive bank run knowing they would get skewered for it."Matt Ocko, a co-founder of DCVC, agreed that "without the publicity &amp; sense of urgency" created on and through social media, "the powers that be may very well have stayed asleep and f'ed the country."How another bank will avoid meeting the same fate at SVB is unclear. One founder's advice is for banks to <a href="https://twitter.com/ProfessorStam/status/1634724578806071297" target="_blank" rel="noopener">take social media more seriously</a>, saying "The same types of tactics that can manipulate an election can be used to undermine the strength of a bank."SVB for its part has deleted its Twitter account entirely.

SVB is the first social media bank run in history. The crisis will change the banking industry forever.

<ul class="summary-list"><li>Danny Moses sees trouble ahead for the US economy following the shocking collapse of Silicon Valley Bank. </li><li>"It just accelerated that slowdown because banks have to really to pull back in their activities," the "Big Short" investor said. </li></ul>"The Big Short" investor Danny Moses said Silicon Valley's shocking collapse is worsening the US economic slowdown. "If you believe it's [the economy] going to slow down, it just accelerated that slowdown because banks have to really to pull back in their activities," Moses said in a <a href="https://www.cnbc.com/2023/03/14/svb-collapse-exposing-grim-economic-problems-big-shorts-danny-moses-.html" target="_blank" rel="noopener">CNBC interview</a> on Tuesday. The US economy has been in a precarious position as it faces high inflation and surging borrowing costs. The Federal Reserve has hiked its benchmark interest rate from nearly zero to upward of 4.5% over the past 12 months. Higher rates encourage saving over spending, which typically pulls down asset prices, saps demand, and increases the risk of an economic slowdown. Exacerbating those economic worries was <a href="https://markets.businessinsider.com/news/stocks/silicon-valley-bank-stocks-financial-crisis-fed-interest-rates-recession-2023-3" target="_blank" rel="noopener">SVB's stunning collapse</a>.The US government Monday <a href="https://www.businessinsider.com/us-government-bails-out-silicon-valley-bank-depositors-fdic-2023-3" target="_blank" rel="noopener">bailed out the go-to lender for start-ups</a> in what was seen as an effort to prevent the collapse from spiraling into a broader crisis. But according to Moses, regulators don't have a clue of what's in front of them."You can't assume that the regulators have any idea what they're actually dealing with now considering that they were completely caught off guard... by what just happened at Silicon Valley Bank," the former FrontPoint Capital lead trader, adding that SVB's bailout "should make people nervous.""The Fed is kidding themselves if they think this situation is just going to go away," Moses continued, adding that markets are underestimating what the fallout could be from the Fed's rapid interest rate hikes.He also warned further trouble lies ahead, as issues still remain on bank balance sheets from commercial real estate and auto loans.

'Big Short' investor Danny Moses says the SVB crisis is speeding up the US economic slowdown

<ul class="summary-list"><li>Entrepreneurs who had money tied up in the Silicon Valley Bank fallout are rethinking finances.</li><li>Yale professor Song Ma and CEO Casey Clark said to start by diversifying banks and relationships. </li></ul>While much of the fallout from <a href="https://www.businessinsider.com/svb-failure-what-the-hell-happened-2023-3">Silicon Valley Bank's collapse</a> has disrupted <a href="https://www.businessinsider.com/hundreds-of-startups-face-crippling-cash-crunch-no-buyer-svb-2023-3">venture capital-backed startups</a>, some small-business owners with money in the bank could also feel the effects. To be sure, there's no data that shows how many non-VC-backed small businesses were affected by Silicon Valley Bank's closure and those who did have funds tied up in the bank will likely get them back. The Treasury, Federal Reserve, and the Federal Deposit Insurance Corporation assured on Sunday that <a href="https://www.businessinsider.com/us-government-bails-out-silicon-valley-bank-depositors-fdic-2023-3">depositors would be fully protected and could access funds starting on Monday</a>. For entrepreneurs who want to take this opportunity to mitigate any future financial risk, there are three strategies for protecting their businesses from another potential crisis, said Song Ma, assistant professor of finance at the Yale School of Management, and Casey Clark, CEO of small business advising firm Cultivate Advisors.<h2>Diversify your bank accounts</h2>If there's one takeaway from SVB's collapse, it's the importance of <a href="https://www.businessinsider.com/personal-finance/ways-make-sure-money-protected-svb-fallout-2023-3">diversifying where you keep your money</a>, Ma said. Since the FDIC insures up to $250,000 of an account holder's funds, he recommends keeping no more than that amount in any one bank account. "For small businesses, it is possible to hedge that risk by diversifying their bank accounts," he said. "If you bank with two banks and give $250,000 on each, then you are insured on both."This strategy is much easier for small businesses than large companies because they typically have fewer assets to spread out, Ma added. "You can't keep all your eggs in one basket," Clark agreed. "It just totally puts a different level of risk."<h2>Broaden your banking relationships</h2>Ma also suggested small-business owners develop relationships with multiple banks. When a bank fails, entrepreneurs risk losing their funds along with the relationships and expertise from the bank's staff that can help them access future financing, Ma said."Think about them as a partner," he said. "Developing those relationships earlier could be quite important."By ensuring you have multiple experts in your network, you're securing an expert to help in crises.<h2>Monitor your cash needs and have a contingency plan</h2>Finally, Ma suggests business owners monitor their cash flow often and set up a contingency plan for unexpected events. For example, this could be a line of credit or a <a href="https://www.businessinsider.com/personal-finance/best-money-market-accounts">money market account</a>, which is an interest-bearing account. "If something happens, how are you going to make your next month or the next two weeks of payroll?" he said. Most small businesses operate historically, waiting to reconcile their books at the end of every month, before making decisions, Clark said. But when a crisis occurs, it can be too late. He recommends entrepreneurs calculate their cash flow performance, which they can do with software like Live Plan, and start thinking proactively. "Run every stress test possible so that you can start to make the right decisions to essentially brace yourself in case you have a fallout," he said.If your non-VC-backed small business has been affected by the Silicon Valley Bank crash, please contact this reporter at <a href="mailto:jortakales@insider.com" target="_blank" rel="noopener">jortakales@insider.com</a>.

Small-businesses owners who had money in SVB can prepare for a financial crisis by doing these 3 things

<ul class="summary-list"><li>Regulators have shut Silicon Valley Bank and taken control of its deposits.</li><li>Shares crashed 86% over the two days before SVB suspended trading Friday.</li></ul>A little-known California bank has become the biggest story in markets.The Federal Deposit Insurance Corporation (FDIC) is taking control of <a href="https://markets.businessinsider.com/news/stocks/silicon-valley-bank-failure-fdic-wall-street-regulator-finance-investing-2023-3?_gl=1*1lxxt8k*_ga*MTgxNTI4ODA2Ni4xNjM0MDMzNTYz*_ga_E21CV80ZCZ*MTY3NzE0NTc0OC4zMjguMC4xNjc3MTQ1NzQ4LjAuMC4w">SVB Financial</a> after its stock-price crash dragged on the biggest names in US banking, including <a href="https://markets.businessinsider.com/stocks/jpm-stock">JPMorgan</a> and <a href="https://markets.businessinsider.com/stocks/bac-stock">Bank of America</a>.Here's everything you need to know about what's happening.<h3>What happened?</h3>SVB is a Santa Clara-based bank that lends money to and takes deposits from Silicon Valley tech startups. It provided funding to 44% of all venture capital-backed tech and healthcare companies that publicly listed on a stock exchange last year, according to its <a href="https://www.svb.com/venture-funded" target="_blank" rel="noopener">website</a>.SVB's shares fell 86% between Thursday's opening bell and Friday before the company announced it would halt trading.Regulators have now shut <a href="https://markets.businessinsider.com/stocks/sivb-stock?utm_medium=ingest&amp;utm_source=markets">SVB Financial Group</a> and have taken control of the bank's deposits. <h3>Why did SVB's stock price crash?</h3>There are two reasons – both tied to the Federal Reserve's aggressive interest-rate hikes as it bids to crush soaring inflation in the US.The Fed's tightening campaign weighed on SVB's bond holdings, and it disclosed a $1.8 billion loss Thursday after completing a $21 billion fire sale of its fixed-income portfolio. The company tried and failed to raise $2.3 billion through stock sales to cover those losses.In addition, startups find it more difficult to access funding with borrowings turning costlier – and that's fueled a high level of deposit outflows from SVB, analysts say. This sparked <a href="https://www.businessinsider.com/svb-silicon-valley-bank-startups-worry-run-pull-accounts-2023-3?r=US&amp;IR=T">fears of a bank run,</a> prompting several of the SVB's clients to limit their exposure to the institution.SVB's "unique niche in the tech world is a real boon when that business is booming, but a problem when it's not," Interactive Brokers chief strategist Steve Sosnick said.<h3>How is it affecting other bank stocks?</h3>Crypto-friendly bank <a href="https://markets.businessinsider.com/stocks/si-stock">Silvergate Capital</a> announced Thursday it would shut down – and the crisis at two financial institutions ignited fears of contagion effects across the entire sector, fueling a sharp selloff across banking stocks.Wall Street's four biggest banks – JPMorgan, Bank of America, <a href="https://markets.businessinsider.com/stocks/wfc-stock">Wells Fargo</a>, and <a href="https://markets.businessinsider.com/stocks/ms-stock">Morgan Stanley</a> – shed $55 billion in combined market value Thursday with investors rattled by the implosion of SVB and Silvergate, according to data from Refinitiv.The <a href="https://markets.businessinsider.com/etfs/invesco-kbw-bank-etf-us46138e6288">KBW Bank Index</a> – which tracks the price of the US's leading publicly-traded banks – plunged 7.7% Thursday for its worst day in almost three years.On Friday, bank stocks offered a mixed picture. JPMorgan's stock price recovered some, while First Republic Bank saw its stock drop 20%. <h3>Are investors worried?</h3>Yes. Some of Wall Street's biggest names have raised the alarm as fears grow that SVB's turmoil will spread to the wider financial system."<a href="https://markets.businessinsider.com/news/stocks/big-short-investor-michael-burry-silicon-valley-bank-collapse-enron-2023-3">It is possible today we found our Enron</a>," 'Big Short' investor Michael Burry said Thursday in a <a href="https://twitter.com/BurryArchive/status/1633988433961177088" target="_blank" rel="noopener">now-deleted Tweet</a>, referencing the scandal-hit energy firm whose collapse came to symbolize the early-2000s stock-market crash.Top economist <a href="https://twitter.com/elerianm/status/1634105811344535553" target="_blank" rel="noopener">Mohamed El-Erian</a> and "<a href="https://twitter.com/scottmelker/status/1634006239800688643" target="_blank" rel="noopener">Wolf of All Streets</a>" trader Scott Melker are also fretting about the wider impact of what's happened.<h3>What happens next?</h3>On Friday, the <a href="https://markets.businessinsider.com/news/stocks/silicon-valley-bank-failure-fdic-wall-street-regulator-finance-investing-2023-3">FDIC shut Silicon Valley Bank</a>. "To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB). At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank," the regulator said in a statement. Billionaire investor Bill Ackman had previously called for the US government to bail out the company because of its important role in the world of venture capital."The failure of SVB Financial could destroy an important long-term driver of the economy as VC-backed companies rely on SVB for loans and holding their operating cash," he said on <a href="https://twitter.com/BillAckman/status/1634028534107602944" target="_blank" rel="noopener">Twitter</a> Thursday evening. "If private capital can't provide a solution, a highly dilutive government preferred bailout should be considered," Ackman added.

Silicon Valley Bank crisis: Everything you need to know about SVB Financial as regulators shut down the bank

<ul><li>US stocks managed to prove resilient and shake off a potential regional bank crisis, with stocks mixed.</li><li>The implosion of Silicon Valley Bank and Signature Bank spurred hopes that the Fed will end its interest rate hikes.</li><li>"We are looking at a historic 2-day drop in the 2-year yield, the largest since right after the 1987 crash," Carson Group's Ryan Detrick told Insider.</li></ul>US stocks proved resilient on Monday, trading mixed despite the continued fallout from the collapse of Silicon Valley Bank and Signature Bank at the end of last week. Helping stocks recover from an early morning sell-off, aside from emergency measures that helped prevent a regional banking crisis, was a plunge in bond yields and <a href="https://markets.businessinsider.com/news/stocks/svb-collapse-fed-rate-cuts-75-basis-points-bank-run-2023-3">growing expectations that the Fed would change its stance on interest rate hikes.</a>"We are looking at a historic 2 day drop in the 2-year yield, the largest since right after the 1987 crash. It feels like a lifetime ago, but six days ago there was an 80% chance of a 50 basis point hike at the next meeting, now there is virtually no chance of that and a growing chorus for no hike at all," Carson Group's chief market strategist Ryan Detrick told Insider.Here's where US indexes stood at the 4:00 p.m. ET close on Monday:<ul><li><a href="https://markets.businessinsider.com/index/s&amp;p_500?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets" rel="">S&amp;P 500</a>: 3,855.76, down 0.15%</li><li><a href="https://markets.businessinsider.com/index/dow_jones?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets" rel="">Dow Jones Industrial Average</a>: 31,819.14, down 0.28%</li><li><a href="https://markets.businessinsider.com/index/nasdaq_composite?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets" rel="">Nasdaq Composite</a>: 11,188.84, up 0.45%</li></ul>According to Detrick, all eyes are on the release of tomorrow's February CPI report. "Should it show inflation slowing, this will greatly take pressure off the Fed and the chances of no hike will grow," Detrick said. Here's what else happened today:<ul><li>Short-dated <a href="https://markets.businessinsider.com/news/bonds/svb-collapse-silicon-valley-bank-bond-yields-2008-financial-crisis-2023-3">US Treasury bond yields posted their largest drop in nearly 15 years</a>, with yields on 2-year US Treasury notes falling as much as 44 basis points.</li><li>First Republic Bank's <a href="https://markets.businessinsider.com/news/stocks/first-republic-bank-stock-price-falls-fears-svb-turmoil-spread-2023-3">stock cratered more than 60% on Monday</a> as investors count the similarities between it and Silicon Valley Bank.</li><li><a href="https://markets.businessinsider.com/news/stocks/charles-schwab-stock-price-crash-investors-circle-banks-bond-losses-2023-3?_gl=1*12lfqq9*_ga*MTkxNzQzNjc2Mi4xNjYxNDU2MDU1*_ga_E21CV80ZCZ*MTY3ODczNzQ4NS44MzUuMS4xNjc4NzM3NTQ5LjAuMC4w">Charles Schwab plunged as much as 25%</a> in early Monday trades as investors scrutinized its $27 billion in unrealized losses related to its massive bond holdings.</li><li>Goldman Sachs now <a href="https://markets.businessinsider.com/news/stocks/svb-failure-goldman-sachs-fed-interest-rate-hike-march-powell-2023-3">expects the Fed to pause its rate hikes</a> at next week's FOMC meeting as uncertainty related to the bank collapse soars. </li><li>Markets are now <a href="https://markets.businessinsider.com/news/stocks/svb-collapse-fed-rate-cuts-75-basis-points-bank-run-2023-3">pricing in Fed interest rate cuts of 75 basis points</a> by the end of the year, according to the CME FedWatch Tool. </li></ul>In commodities, bonds and crypto:<ul><li><a href="https://markets.businessinsider.com/commodities/oil-price?type=wti&amp;utm_medium=ingest&amp;utm_source=markets" rel="">West Texas Intermediate crude</a> oil fell 2.86% to $74.49 per barrel. <a href="https://markets.businessinsider.com/commodities/oil-price?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets" rel="">Brent crude</a>, oil's international benchmark, dropped 2.84% to $80.43.</li><li><a href="https://markets.businessinsider.com/commodities/gold-price?utm_medium=ingest&amp;utm_source=markets" rel="">Gold</a> rose 2.75% to $1,918.60 per ounce.</li><li>The yield on the 10-year Treasury sank 16 basis points to 3.54%.</li><li>Bitcoin rose 9.22% to $24,388, while ether jumped 5.69% to $1,686. </li></ul>

US stocks shake off contagion fears to trade mixed amid hopes SVB crisis spurs Fed policy shift

<ul class="summary-list"><li>Chaos in the banking sector was a long time coming, according to a former IMF chief economist. </li><li>The crisis was, in part, caused by banks betting on a prolonged period of ultra-low rates, Kenneth Rogoff said. </li></ul>Turmoil in the banking sector was set to occur long before Silicon Valley Bank (SVB) failed earlier this month, said Kenneth Rogoff, former chief economist at the International Monetary Fund.Rogoff, a leading scholar of financial crises, said chaos ensued after a number of years of ultra-low interest rates. In the case of SVB, the bank had a substantial proportion of deposits invested in securities that it initially had planned to hold to maturity, along with a large number of uninsured deposits. But when rates when up, the bond values fell. And after SVB was forced to sell those bonds at a steep loss before maturity, customers panicked about the safety of their deposits and withdrew funds en masse, causing a run on the bank."What happened is Silicon Valley Bank is maybe a little extreme in its naivete, but almost any kind of investment strategy that had illiquid assets — longer term assets — is going to lose money like this," Rogoff, an economics professor at Harvard University, told <a href="https://money.yahoo.com/video/banking-crisis-worldwide-phenomenon-professor-154731443.html" target="_blank" rel="noopener">Yahoo Finance Live</a> on Thursday."I didn't know it would [start] in the US banking sector," he said, adding that issues could've taken place in Japan or Italy before SVB was seized by regulators. "It's a worldwide phenomenon."Since the global financial crisis over a decade ago until last year, banks have been managing risk and investing under loose monetary policy, which was "a good moneymaker for a long time," Rogoff added.Now that the Fed and other central banks are raising rates, institutions have to adapt to drastically different economic conditions to service their customers, he explained.

The current banking crisis is a 'worldwide phenomenon' that started long before SVB failed, Harvard professor and former IMF economist says

Welcome back! <a href="https://twitter.com/dandefrancesco">Dan DeFrancesco</a> in NYC, and I feel like my entire life has been a lie after <a href="https://www.insider.com/tiktok-artificial-sizzle-fajitas-restaurant-water-special-sauce-chilis-dennys-2023-3">learning the truth about "sizzling" fajitas at restaurants.</a>Today, we've got stories on a fintech that's <a href="https://www.businessinsider.com/fintech-symphony-engineering-office-sophia-antipolis-south-france-2023-3">set up shop in the south of France</a>, the <a href="https://www.businessinsider.com/the-kings-college-financial-troubles-small-christian-college-2023-3">potential downfall of a small, Christian college with Wall Street ties you've probably never heard of</a>, and <a href="https://www.insider.com/avoid-these-intermittent-fasting-mistakes-for-weight-loss-researcher-2023-3">why you're doing intermittent fasting all wrong</a>. But first, now what?If this was forwarded to you, <a href="https://www.businessinsider.com/subscription/newsletter/10-things-on-wall-street">sign up here</a>. Download Insider's app <a href="https://www.insider.com/app">here</a>.<a href="https://www.businessinsider.com/silicon-valley-bank-failure-long-term-impact-tech-vc-finance-2023-3" target="_blank" rel="noopener"></a>1. Picking up the pieces from SVB.Where do we go from here?It's just over a week from Federal regulators announcing they would be <a href="https://www.businessinsider.com/us-government-bails-out-silicon-valley-bank-depositors-fdic-2023-3">bailing out depositors of Silicon Valley Bank and Signature Bank</a>. Now, the FDIC said Sunday that New York Community Bancorp's Flagstar Bank will take on <a href="https://www.fdic.gov/news/press-releases/2023/pr23021.html" target="_blank" rel="noopener">nearly all of Signature Bridge Bank's deposits</a>.The initial bail out was meant to stop panic among the general public and limit contagion.About that...The past week has not been kind to the banking industry. SVB Financial, the parent company, <a href="https://markets.businessinsider.com/news/stocks/svb-bankruptcy-chapter-11-auction-silicon-valley-bank-closure-fdic-2023-3?_gl=1*1r388ph*_ga*NDEwMTkzOTE2LjE2NjYxMjcyNDQ.*_ga_E21CV80ZCZ*MTY3OTA2MDYxNC41MDAuMS4xNjc5MDc2NTU3LjYwLjAuMA..">has filed for bankruptcy</a> as it still awaits a potential buyer. Meanwhile, the biggest US banks <a href="https://markets.businessinsider.com/news/stocks/first-republic-bank-svb-morgan-stanley-jpmorgan-talks-financial-aid-2023-3?_gl=1*h8ou9k*_ga*NDEwMTkzOTE2LjE2NjYxMjcyNDQ.*_ga_E21CV80ZCZ*MTY3OTI0NzMxOS41MDEuMS4xNjc5MjQ5MjEzLjguMC4w">stepped in to deposit $30 billion into First Republic</a>.Still, that <a href="https://www.businessinsider.com/first-republic-bank-rescue-sale-problems2023-3">might still not be enough to save the beleaguered bank</a>. It's gotten so bad that famed investor and noted Midwesterner Warren Buffett is <a href="https://www.businessinsider.com/warren-buffett-white-house-investment-in-regional-banks-2023-3">talking to the Biden administration about how to save regional banks</a>. The bad banking vibes have even spread across the pond. Credit Suisse, whose problems long preceded SVB's downfall, to be fair, <a href="https://www.businessinsider.com/credit-suisse-ubs-offers-up-to-billion-rescue-deal-report-2023-3">is getting acquired by Swiss rival UBS</a>. The deal is worth $2 billion, a considerable amount less than what the bank's market cap was on Friday. Here's a <a href="https://www.snb.ch/en/mmr/reference/pre_20230319/source/pre_20230319.en.pdf">statement from the Swiss National Bank on the news</a>.In an hour-long call held late on Sunday evening, top UBS executives <a href="https://www.businessinsider.com/ubs-credit-suisse-acquisition-colm-kelleher-2023-3">defended their decision</a> — and analysts began breaking down <a href="https://www.businessinsider.com/ubs-credit-suisse-acquisition-colm-kelleher-2023-3">what comes next</a>.But, as we look at <a href="https://www.businessinsider.com/ubs-credit-suisse-acquisition-colm-kelleher-2023-3">what the future holds</a> for the world of finance, it's worth remembering how we got here. Insider has you covered with three features looking at <a href="https://www.businessinsider.com/vcs-and-founders-silicon-valley-bank-meltdown-fdic-supporting-bank-2023-3?r=rr">the play-by-play perspective on how SVB fell apart</a>, <a href="https://www.businessinsider.com/big-banks-svb-first-republic-jpmorgan-rescue-crisis-2023-3">why big banks came out on top</a>, and <a href="https://www.businessinsider.com/silicon-valley-bank-failure-long-term-impact-tech-vc-finance-2023-3">how the knock-on effects will be felt for years to come across industries</a>.<a href="https://www.businessinsider.com/vcs-and-founders-silicon-valley-bank-meltdown-fdic-supporting-bank-2023-3?r=rr">Panic and recrimination: Inside Silicon Valley's first real financial crisis.</a><a href="https://www.businessinsider.com/big-banks-svb-first-republic-jpmorgan-rescue-crisis-2023-3">Wall Street keeps winning even in a banking crisis.</a><a href="https://www.businessinsider.com/silicon-valley-bank-failure-long-term-impact-tech-vc-finance-2023-3">Silicon Valley Bank was the bank for tech. Its collapse is everyone's problem.</a><a href="https://www.businessinsider.com/ubs-credit-suisse-acquisition-colm-kelleher-2023-3">Top UBS executives defend their "emergency rescue" of Credit Suisse. Here's what comes next.</a>In other news:<a href="https://www.businessinsider.com/fintech-symphony-engineering-office-sophia-antipolis-south-france-2023-3"></a><div type="image" title="French Riviera" height="4512" width="7033" msid="98811383" hostid="261" sizebytes="3303096"></div>2. Fintech in the south of France. Messaging and workflow startup Symphony opened an engineering hub just outside Nice where employees can split their time between the Alps and the French Riviera. (Must be Nice!) <a href="https://www.businessinsider.com/fintech-symphony-engineering-office-sophia-antipolis-south-france-2023-3">Check out photos from an office location we are all jealous of.</a>3. VC's LPs weigh in. The people backing venture capitalists, known as limited partners, share their thoughts on how VCs handled the crisis at Silicon Valley Bank. <a href="https://www.businessinsider.com/lp-react-how-venture-capital-responded-svb-collapse-2023-3" target="_blank" rel="noopener">Read more here</a>.4. My college might soon no longer exist. Insider's Paige Hagy has a fascinating first-person look at her experience attending The King's College. The small, Christian school in New York City's financial district is on the brink of going under. <a href="https://www.businessinsider.com/the-kings-college-financial-troubles-small-christian-college-2023-3">You're gonna want to read this one.</a>5. Invest in single-family rentals, they said. It'll be easy, they said. From iguanas squatting in the attic to dozens of snakes living in the walls, Wall Street is getting a crash course on being a landlord at scale. <a href="https://www.insider.com/corporate-single-family-rental-landlords-face-peculiar-maintenance-2023-3">More wild examples of the challenges of property management</a>. 6. PE and porn. The parent company of Pornhub (a website I am sure none of you are familiar with) was acquired by a new private-equity firm named, wait for it, Ethical Capital, The Financial Times reports. <a href="https://www.ft.com/content/69c3295e-6f45-4b5f-8e7b-3b8d56ca46c8?campaign_id=4&amp;emc=edit_dk_20230317&amp;instance_id=87931&amp;nl=dealbook&amp;regi_id=110905846&amp;segment_id=128004&amp;te=1&amp;user_id=4cbce85b39b05a62487c63187ecd51cd">More on the deal here. </a>7. Forget Deadheads and Parrotheads, the Swifties are on tour. Taylor Swift's "Eras Tour" kicked off this weekend in Arizona. We broke down what goes into preparing a city for the arrival of the superstar's rabid fans. <a href="https://www.businessinsider.com/taylor-swift-starts-eras-tour-glendale-arizona-swift-city-2023-3?_gl=1*1kknr4y*_ga*NDEwMTkzOTE2LjE2NjYxMjcyNDQ.*_ga_E21CV80ZCZ*MTY3OTA2MDYxNC41MDAuMS4xNjc5MDg0OTc0LjM5LjAuMA..">From new bars to thousands of cookies, here's how to build out "Swift City."</a>8. So you want to get into the fast-food business? Fast food could mean fast money, but it won't necessarily come cheap. We've got the rundown on <a href="https://www.businessinsider.com/mcdonalds-chick-fil-a-taco-bell-fast-food-franchise-costs-2019-5">how much it costs to open 12 of the biggest fast-food chains in the US.</a>9. How to ride the rails in style. Insider's Joey Hadden has ridden nearly 1,000 miles across multiple countries on business-class trains. <a href="https://www.insider.com/business-class-trains-amtrak-via-rail-trenitalia-canada-europe-ranked-2023-3">Here's where she ranks them all. </a>10. If you're trying intermittent fasting, don't do this. It's a popular diet, but you need to do it right! <a href="https://www.insider.com/avoid-these-intermittent-fasting-mistakes-for-weight-loss-researcher-2023-3">These are five common mistakes to avoid, according to a researcher. </a>Curated by Dan DeFrancesco in New York. Feedback or tips? Email <a href="mailto:ddefrancesco@insider.com">ddefrancesco@insider.com</a>, tweet <a href="https://twitter.com/dandefrancesco">@dandefrancesco</a>, or <a href="https://affiliate.insider.com?h=b83e78f6bb45aba7034c3baf1ec66d1b6c1d3afa26264bdb8604d5b9f2351262&amp;postID=6414aa26a5f1ba686b007645&amp;site=bi&amp;u=https%3A%2F%2Fwww.linkedin.com%2Fin%2Fdan-defrancesco-29b12449%2F">connect on LinkedIn</a>. Edited by Jeffrey Cane (tweet <a href="https://twitter.com/jeffrey_cane">@jeffrey_cane</a>) in New York and Hallam Bullock (tweet <a href="https://twitter.com/hallam_bullock">@hallam_bullock</a>) in London.

Picking up the pieces in the wake of SVB's collapse

<ul class="summary-list"><li>Morgan Stanley Wealth Management's CIO says the Fed needs to stay on course in its inflation battle. </li><li>"I have worried about central banks being late to the party on this inflation challenge," Lisa Shalett told Bloomberg. </li></ul>Morgan Stanley Wealth Management's chief investment officer says the US central bank needs to stick to its guns on fighting inflation, and it shouldn't react to the collapse of Silicon Valley Bank as the event bears little resemblance to the 2008 crisis. "I have worried about central banks being late to the party on this inflation challenge," Lisa Shalett said on <a href="https://www.youtube.com/watch?v=Z-OZ5_QF2_M" target="_blank" rel="noopener">Bloomberg Surveillance</a> Wednesday, adding that if the Fed's "credibility has a chance of being preserved" they need to continue the tightening campaign. The Fed needs to stay on course in raising interest rate hikes, Shallet says. Otherwise, there will be long-term structural damage to the US economy.After regulators closed Silicon Valley Bank, investors speculated that the Fed could pause raising rates at the next policy meeting to avoid putting more stress on the financial system. US treasury yields posted their biggest declines in more than a decade and fed fund futures showed investors betting that rate cuts will take place by the end of this year. Although SVB's collapse was the second-largest banking failure in US history and the largest since 2008, the Morgan Stanley exec says the two events are not alike. When the housing market crashed in 2007, top officials were worried about counterparty credit risk and further contagion."That's not what this is about," Shallet said. "These are about individual banks, who potentially have been overly aggressive in funding themselves out the curve during an episode of central bank tightening."Instead, she says the the SVB fiasco was a "wake up call" for banks who missed "economics 101."

The Fed should keep up the fight against inflation as SVB collapse is not like the 2008 crisis, Morgan Stanley Wealth Management CIO says

<ul class="summary-list"><li>Big banks are sitting on $650 billion of unrealized losses, Moody's has estimated.</li><li>It's a sign even Wall Street's best-known names are feeling the heat from the Treasury-market rout.</li></ul>Crashing bond prices <a href="https://markets.businessinsider.com/news/stocks/svb-silicon-valley-bank-collapse-jpmorgan-morgan-stanley-bank-stocks-2023-3">sank Silicon Valley Bank</a> in March — and there's reason to believe that what triggered the California lender's collapse may be haunting Wall Street again.The brutal <a href="https://markets.businessinsider.com/news/bonds/bond-market-crash-what-are-treasury-yields-stocks-economy-americans-2023-10">Treasury-market meltdown</a> has hit some of the largest financial institutions hard, dragging down the share prices of big names such as <a href="https://markets.businessinsider.com/stocks/bac-stock">Bank of America</a> and fueling fears that the turmoil triggered by SVB's bankruptcy may not be over just yet.Here's everything you need to know about unrealized losses, including why they're dragging on bank stocks and whether they could trigger another financial crisis.<h2>Unrealized losses</h2>Treasury bonds — debt instruments the government issues to fund its spending — have been on a nightmarish run since the onset of the pandemic, with investors fretting about <a href="https://markets.businessinsider.com/news/stocks/stock-market-charts-crash-federal-reserve-interest-rates-bonds-crypto-2023-6">rising interest rates</a> and the long-term viability of <a href="https://markets.businessinsider.com/news/bonds/bond-market-crash-government-debt-ceiling-crisis-wall-street-deficit-2023-10">the US's massive deficit</a>.BlackRock's <a href="https://www.marketwatch.com/investing/fund/tlt" target="_blank" rel="noopener">iShares 20+ Year Treasury fund</a>, which tracks longer-duration debt prices, has plunged 48% since April 2020. Meanwhile, <a href="https://markets.businessinsider.com/rates/u-s--rates-10-years">10-year Treasury yields</a>, which move in the opposite direction to prices, recently <a href="https://markets.businessinsider.com/news/bonds/bond-market-crash-us-treasury-yields-federal-reserve-debt-crisis-2023-10">spiked above 5%</a> for the first time in 16 years.As a result of that sell-off, some of the US's biggest banks are now sitting on unrealized, or "paper," losses worth hundreds of billions of dollars. That means the value of their bond holdings has plunged, but they've chosen to hold on rather than offload their investments.<a href="https://www.reuters.com/business/finance/bank-americas-unrealized-losses-securities-rose-1316-bln-2023-10-17/" target="_blank" rel="noopener">Moody's</a> estimated last month that US financial institutions had racked up $650 billion worth of paper losses on their portfolios by September 30 — up 15% from June 30. The ratings agency's data still doesn't account for a hellish October where the longer-term collapse in bond prices spiraled into one of the <a href="https://markets.businessinsider.com/news/bonds/treasury-bond-yields-market-selloff-market-crashes-dot-com-bubble-2023-10">worst routs in market history</a>.These "losses" are not the same as debt, however, which describes actual borrowings that need to be repaid. <a href="https://markets.businessinsider.com/stocks/bac-stock">Bank of America</a> is the big lender worst affected by the crash in bond prices, having disclosed a potential $130 billion hole in its balance sheet last month.The other "Big Four" banks — <a href="https://markets.businessinsider.com/stocks/c-stock">Citigroup</a>, <a href="https://markets.businessinsider.com/stocks/jpm-stock">JPMorgan Chase</a>, and <a href="https://markets.businessinsider.com/news/wfc-stock">Wells Fargo</a> — have also racked up unrealized losses in the tens of billions, according to their second- and third-quarter earnings reports.<h2>Another SVB-style crisis?</h2>Silicon Valley Bank failed in March after disclosing a $1.8 billion loss on its own bond portfolio, triggering a run on deposits. Similarly, big banks' huge unrealized losses are also sparking concern among Wall Street doom-mongers."'Higher for longer' is absurd baloney," the market vet <a href="https://twitter.com/Convertbond" target="_blank" rel="noopener">Larry McDonald said in a post on X</a> Sunday, referring to the Fed signaling it would hold interest rates at about their current level well into 2024 in a bid to kill off inflation. "A 6% + Fed funds and Bank of America is near insolvency."It's important to remember that BofA's $130 billion losses are still unrealized. Unlike SVB, it isn't officially in the red yet because it has not sold its bond holdings.The bank's chief financial officer, Alastair Borthwick, shrugged off the market's worries on last month's earnings call, pointing out that most of the bank's fixed-income portfolio was low-risk government bonds it planned to hold until the debt expires."All of these are unrealized losses are on government-guaranteed securities," he told reporters. "Because we're holding them to maturity, we will anticipate that we'll have zero losses over time."There's still a possibility that spooked BofA customers will pull their money en masse, as they did with SVB — but that hasn't happened. In fact, deposits are up after registering about 200,000 new accounts in the third quarter.Some analysts also believe the worst of the Treasury-market rout is now over, with the Federal Reserve starting to signal that its tightening campaign is nearly done. Ten-year yields have softened in recent weeks, falling from 5% to 4.6% as of Tuesday.<h2>Banks under pressure</h2>That doesn't mean the Big Four banks can afford to just dismiss the bond rout.In a paper published earlier this year, researchers for the <a href="https://www.kansascityfed.org/Economic%20Review/documents/9473/EconomicReviewV108N2MarshLaliberte.pdf" target="_blank" rel="noopener">Kansas City Fed</a> concluded that paper losses could still drag down a bank's share price: "Unrealized losses can increase equity costs as investors' perceptions of financial health deteriorate."That's been happening this year, with three of the big four banks' stocks sliding. Predictably, Bank of America has been worst affected, with its stock down 24% over the past year and 14% year-to-date."Worries over unrealized losses on sovereign bond holdings are also weighing on the US lenders, to again reflect concerns over rising interest rates and whether the US Federal Reserve will ultimately tighten policy by too much for too long," AJ Bell's Russ Mould said in a note last week.Unrealized losses may not be about to trigger another financial crisis — but as long as bank stocks are down, they'll remain a concern for Wall Street's biggest names.

You Searched For "svb crisis" and got 12 results

HSBC acquires UK arm of Silicon Valley Bank for £1

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Relax, SVB's implosion is nothing like the 2008 financial crisis, and the economy will be fine

Jacob Zinkula

SVB solution ensures taxpayer dollars are not put at risk: President Biden

PTI

SVB is the first social media bank run in history. The crisis will change the banking industry forever.

Kali Hays

'Big Short' investor Danny Moses says the SVB crisis is speeding up the US economic slowdown

Zahra Tayeb

Small-businesses owners who had money in SVB can prepare for a financial crisis by doing these 3 things

Jennifer Ortakales Dawkins

Silicon Valley Bank crisis: Everything you need to know about SVB Financial as regulators shut down the bank

George Glover

US stocks shake off contagion fears to trade mixed amid hopes SVB crisis spurs Fed policy shift

Matthew Fox

The current banking crisis is a 'worldwide phenomenon' that started long before SVB failed, Harvard professor and former IMF economist says

Morgan Chittum

Picking up the pieces in the wake of SVB's collapse

Dan DeFrancesco

The Fed should keep up the fight against inflation as SVB collapse is not like the 2008 crisis, Morgan Stanley Wealth Management CIO says

Morgan Chittum

Bond-market crash leaves big banks with $650 billion of unrealized losses as the ghost of SVB continues to haunt Wall Street

George Glover

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