The KPMG consultancy give him approval to the accounts of recently failed banks Silicon Valley Bank (SVB) and SignatureBank in paths audits carried out respectively 14 and 11 days ago, as reported by The Wall Street Journal on Monday. The audits were for the 2022 financial year, so KPMG was not reviewing the accounts for the current period in which the problems have developed, but among its functions is to point out the risks and other relevant issues at the accounting close, the newspaper indicates.
SVB had a peak of deposits in the first quarter of 2022 and these fell by 13% in the last nine months of the year. In the current year, he disclosed on March 8 that customers were “burning cash” at a high level that “increased further in February,” he adds.
The possible errors of KPMG will foreseeably form part of the investigation announced this Monday by the Federal Reserve into its own supervision of SVB, with an expected publication date of May 1, and of the lawsuits that have begun to be filed by clients. The consultancy told the Journal that she cannot comment on specific audits due to confidentiality concerns, but in her defense stated that she is not responsible for events subsequent to her account analysis.
withdrawal of deposits
The SVB announced last Wednesday that it was looking for a capital increase to tackle financial difficulties, which led many depositors to withdraw their funds creating one of the biggest bank panics in a decade: on Thursday they tried to withdraw 42,000 million dollars, according to what it indicated to the regulators. As a consequence, the authorities closed and intervened the bank on Friday due to lack of liquidity.
Signature Bank, which has fewer assets than SVB, was also the victim of a “bank run” last week and was shut down and seized by regulators on Sunday.
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The US government, the banking regulator (FDIC, for its acronym in English) and the central bank presented an emergency plan on Sunday to protect the deposits of both entities and said that clients could withdraw their money this Monday.
Even so, fear of a financial crisis has weighed on the banking sector in the US and other markets, with sharp falls in regional banks such as First Republic Bank, which today lost almost 62% of its value, and whose accounts have been also audited by KPMG, indicates the Journal.