Silicon Valley Bank (Silicon Valley Bank Bank ") Flashing in two days caused a global sensation.How did this storm start?Will it lead to systemic financial risks like the "Lehman incident" in 2008?
Silicon Valley Bank headquarters is located in California. It was established in 1983. Before the closure, it was the 16th largest commercial bank in the United States. It was the largest local deposit of Silicon Valley.The key to success is deeply embedded in the structure of the beginning of the world.Once the start -up enterprise joins the "ecosystem" of Silicon Valley Bank, you can participate in a large number of activities and meet other investors and founders, which has allowed many initials to cooperate with Silicon Valley Bank.
Benefiting from the technology boom between 2019 and 2021, startups and venture capital companies have a lot of cash, which has caused Silicon Valley Bank's deposits to surge.The total deposit of its parent company Silicon Valley Bank Financial Group was slightly more than 60 billion yuan at the end of the first quarter of 2020 (USD, the same below, about S $ 80.835 billion).By the end of the first quarter of 2022, this number had increased to nearly 200 billion US dollars.
The Federal Reserve ’s interest rate increase brought investment losses.
At that time, the market interest rate was close to zero. With these deposits, Silicon Valley Bank purchased long -term US government bonds with tens of billions of dollars.Government bonds have almost no risk of breach of contract and should be very safe.Who would like to launch a radical interest rate hike operation for the Federal Reserve to suppress inflation, the interest rate has been raised to 4.75 % over the past year.Fixed asset investment has become a loss of money.
Assume that the value of the national debt is $ 100, when purchasing Treasury bonds, the ticket interest rate is equal to a market interest rate of 10%.Investors pay $ 100 when buying government bonds, and will receive a principal of $ 100 and interest of 10 yuan a year later.After the Federal Reserve raised interest rates, assuming that the market interest rate increased to 20%. At this time, depositing money into banks or investing in other wealth management products. The return one year later was 120 yuan. Howevers return.Only the national debt holders can only sell the national bonds to match the income of other investment products, and the price of national debt is reduced.
This is why, although U.S. Treasury bonds are safe assets with almost no risk of breach of contract, and they still bring losses.In fact, as long as the domestic bonds are not sold in advance, and the market interest rate declines, the price of Treasury bonds will rise, and Silicon Valley Bank will not lose.Unfortunately, there was a problem with liquidity at this time.
The outflow of funds leads to a liquidity crisis
I mentioned earlier that Silicon Valley Bank embedded in the start -up world, which is the key to its success.However, a single customer structure also laid foreshadowing for the crisis.High -tech companies and start -ups can easily raise funds when the policy is loose.After the Federal Reserve raised interest rates, the US dollar in the market decreased, financing costs rose, and it was more difficult for start -ups to get money.Coupled with most of the science and technology innovation companies, it has not been profitable, and facing the situation of layoffs and decline in business conditions when funds are tight. Many companies need to use money.
Increased money with money, Silicon Valley Bank's deposits fell from nearly US $ 200 billion at the end of March 2022 to US $ 173 billion at the end of 2022, and the decline was accelerating this year.
In order to improve liquidity and reserve more cash, Silicon Valley Bank sells long -term government bonds, and also intends to issue new stocks to raise funds.The parent company of the bank announced on Wednesday (8th) that a large amount of securities had been sold, and the after -tax loss was about 1.8 billion US dollars.In order to cope with potential capital outflows and funds for new loans, banks also intend to issue stocks to raise about $ 2.25 billion in capital.
Unexpectedly, the current investor is already a bird of surprise.As soon as the news came out, it immediately caused panic selling for Silicon Valley Bank stocks.In the face of the plunge stock price, Silicon Valley Bank canceled the issue of issuing stocks.The customers of the bank tried to withdraw up to $ 42 billion in deposits the next day (9th), accounting for a quarter of the total deposit, which consumed the cash of Silicon Valley Bank.
As long as the squeezing is at the beginning, it is the prediction of self -realization.Two days later, Silicon Valley Bank announced bankruptcy.
Silicon Valley Bank's closed shock waves
The bankruptcy of Silicon Valley Bank first hit the store and investors.As of the end of last year, Silicon Valley Bank estimated to have $ 151 billion in non -insurance deposits.Federal DEPOSIT Insurance Corp provides banks with a maximum deposit insurance for banks.Storage households with more than $ 250,000 may not get all the money quickly, including many science and technology enterprises.
Over the years, the home solar installation company Sunrun has provided financing by Silicon Valley Bank.As Silicon Valley bank closed down, Sunrun's stock price plunged 12%last Friday.There are many similar companies, including many cryptocurrency companies, which has also been strongly impacted by the cryptocurrency market.
Circle Internet Financial, the operator of USD Coin (USDC), one of the main cryptocurrencies, has $ 3.3 billion in deposits in Silicon Valley Bank.After Silicon Valley Bank went bankrupt, USDC's price fell sharply.USDC is known as a stable currency cryptocurrency. According to the issue design, it should be traded at a price of $ 1.
Silicon Valley bank closed down and fell to US bank stocks.The market value of US banks has evaporated about $ 90 billion on Monday, and the biggest loss comes from medium -sized banks similar to Silicon Valley Bank.Silvergate Capital, a bank focusing on the cryptocurrency industry, plummeted by 30%after the market, announced that it has stopped business and voluntarily liquidated Silvergate Bank, a subsidiary of the cryptocurrency industry. The liquidation plan includes the full deposit.
In this turbulent, the most severe banks are banks that are over -expanded by loans and are linked to high -risk assets such as real estate mortgage loans, or banks with relatively large customers.These customers are more sensitive to the market. As soon as the wind blows the grass, go to the bank to withdraw money.Two days after the closure of Silicon Valley Bank, Signature Bank, headquartered in New York, also closed down.The bank's business focuses on the dental currency industry.Investors are worried that more and more similar banks will be impacted.
However, stocks of JP Morgan Chase, Citigroup, and Bank of America have also fallen, but the selling range is not so large.
Will the Lehman brothers come reproducible?
The US President Biden issued a five -minute statement in the White House on March 13.He said that federal financial officials took over the business of Silicon Valley Bank and the bank, and all customers of the two banks could immediately retrieve their deposits.
Most people in the industry commented that after the incident, the US regulatory authorities quickly took over the Silicon Valley Bank to control the spillover effect.On the other hand, this incident is different from the 2008 financial crisis, which is unlikely to cause a comprehensive financial turmoil.Since 2008, the supervision of the US banking industry is very strict, and bank firewalls have been established.
The Royal Bank Bank analyst Gerard Cassidy analyzed that the liquidity risk of Silicon Valley Bank caused a limited impact on the overflow effect, and the funds of large Wall Street banksThe source is mainly retail deposits, not concentrated on technology companies, so the possibility of evasion of large -scale funds is unlikely.
At present, the pressure of the American banking industry is very different from the financial crisis more than ten years ago.The reason why Silicon Valley Bank is deeply trapped because of the interest rate hike, a large amount of government bond prices fell.However, the national debt can basically ensure that the full repayment is paid at the time of expiration, and it is very different from the sub -mortgage housing loan products that lead to the bankruptcy of Lehman brothers.
Last Friday, investors not only did not avoid the US Treasury bonds, but instead swarmed to buy. The problem of betting on the US banking industry could slow down economic growth and eventually led to a decline in interest rates.
Although the closure of Silicon Valley Bank may not cause a large -scale financial crisis, it will inevitably have a great impact on high -tech and new companies.In 2023, recession is a topic that cannot be bypassed.It is still unknown whether it will impact the global economy in the future.
