Silicon Valley Bank went out of business on Friday, making it the second-largest bank failure in U.S. history. This sent shock waves through the country’s financial system. Now, people all over the world can feel how it changed things.
By approving an extraordinary intervention, the Biden administration reassured depositors that they would be able to get their money on Monday. The U.S. Federal Reserve also took steps to protect banks from the collapse’s financial risks.
But regulators in other countries are still looking into what might happen to their economies, and some are starting to take action. Monday, HSBC bought SVB UK for just over $1. The British government and the Bank of England helped make this happen.
According to its website, SVB had branches in eight other countries, such as China, India, and Israel. It gave a lot of loans to new businesses and tech companies.
In a petition to Treasury Secretary Janet L. Yellen, Y Combinator, an American tech accelerator that has helped hundreds of companies around the world, said that many of the start-ups it has helped used SVB as their only bank and that its failure could cost thousands of jobs.
Here are some of the countries that have been affected:
Canada
On Monday, Canadian regulators said that the local SVB branch would be taken over temporarily. In a statement, the Office of the Superintendent of Financial Institutions said that it wants to take permanent control of the bank’s assets and has asked the attorney general for a “winding-up order.”
The statement said that the bank had a branch in Toronto and mostly lent money to businesses.
In a statement, Peter Routledge, who is in charge of financial institutions, said that taking over the bank temporarily was done to “protect the rights and interests of the branch’s creditors.” “I want to make it clear that the Canadian branch of Silicon Valley Bank does not accept deposits from Canadians. This is because of things that are unique to Silicon Valley Bank in the United States.”
In a statement released Monday, the Toronto-based company AcuityAds said that it has about $55 million in cash deposits with SVB. It stopped trading securities on Friday, which was the day the bank failed.
India
Rajeev Chandrasekhar, the junior minister for skill development and entrepreneurship, met virtually with hundreds of start-ups and funds that could be affected on Tuesday. He said that the ministry will suggest that India’s central bank make it easier for Indian banks to give credit to Indian start-ups that are doing business in the U.S. He told them in a text message that the government will help them “weather this storm.”
The petition by Y Combinator was signed by a lot of Indian business owners who wanted to protect jobs and give regional banks stronger oversight. India’s Economic Times said that 40 Indian start-ups backed by Y Combinator had at least $250,000 in deposits with SVB, and more than 20 firms had deposits of more than $1 million.
These businesses were hurt by the crash of Silicon Valley Bank.
Ashish Dave, CEO of the Mirae Asset venture investments firm, said that early-stage start-ups in India that are focused on the U.S. market are the ones that are most affected. “There was too much uncertainty on Friday, but the risk has gone down since the Fed took action,” he said over the phone. “We need to figure out how and when the founders can get to their stuck capital.”
The most obvious effect was on the mobile gaming company Nazara Technologies, whose shares fell 7 percent on Monday and hit a new low, according to the newspaper Business Standard. The report said that two of its subsidiaries held about $7.7 million in cash at SVB and that the company did not expect this to affect its daily operations or plans for growth.
Sweden
Alecta is a Swedish pension fund and one of the biggest investors on the country’s stock market. The company said in a statement Monday that it had more than $1 billion invested in SVB and Signature Bank, two banks that failed over the weekend. A Bloomberg News study found that it was the bank’s fourth-largest shareholder.
“It won’t make much of a difference to our clients’ pension payments in the future.” Alecta’s spokesman, Jacob Lapidus, said in an email.
Monday, the country’s financial watchdog said that the failure of SVB doesn’t threaten the country’s financial stability. In a statement, the agency said that it is in touch with Alecta, local banks, and businesses to find out how much risk they face.
Customers of Silicon Valley Bank let out a sigh of relief as they log in to their accounts
Germany
On Monday, German regulators told the local branch of SVB that it could no longer make withdrawals or payments. The financial authority, BaFin, said in a statement that the bank might not be able to meet its obligations, but that it did not pose a threat to the stability of the financial system.
The bank’s total assets in Germany were just over 789 million euros, which is about $844 million. The bank has been doing business in Germany since 2018, according to the statement.
