The authorities are looking for a buyer for the bankrupt financial institution and the Bank of London assures that it has made an offer as part of the consortium
The United States Secretary of the Treasury, Janet Yellen, ruled out a bailout for Silicon Valley Bank this Sunday (SVB) and tried to distance itself from the 2008 financial crisis, reports Efe. The regulator is looking for a buyer for the bank, intervened on Friday. The Bank of London has admitted that it has made an offer, as part of the consortium.
On the CBS show ‘Face the Nation’, Yellen assured that the government will not resort to a bank bailout but acknowledged that there is concern for SVB depositors, many of them emerging companies. “We are focused on trying to respond to their needs,” she added.
The California-based bank announced last Wednesday that it was seeking a capital increase to try to deal with his financial difficulties, which had led him to get rid of investments worth about 21,000 million dollars, with a loss of about 1,800 million.
That announcement led many customers to withdraw their funds, after which regulators had to close the bank on Friday. due to lack of liquidityand subsequently stock price collapsed of the company, which in turn affected the banking sector in general, both in the United States and in other countries.
Deposits of $250,000
The Federal Deposit Insurance Corporation (FDIC) announced that SVB will reopen tomorrow monday and that customers with guaranteed deposits -up to $250,000, according to US regulations- will have access to their money, but most exceed that figure, according to specialized media.
Fearing a contagion effect on US regional banks, the official stated in the program that the country’s banking system is “safe and well capitalized”, and attributed the collapse of SVB to the policy of interest rate rises for part of the Federal Reserve to control inflation.
In this sense, he added that the regulator is considering the “available options” to rectify the situationincluding the purchase of SVB by another entity, about which Bloomberg reported this Sunday that the FDIC has started an auction process that could end in a few hours.
Bloomberg indicates that the FDIC, which took control of the bank on Friday, opened the auction process this Saturday and will accept final bids this Sunday night, but could end without results.
Related news
The CNBC channel reported that, if a buyer is not found, the authorities are considering other options, such as a protection mechanism for unsecured deposits -over $250,000- or a banking service from the Federal Reserve that supports entities exposed to SVB.
Meanwhile, almost 500 venture capital firms have joined an open letter after the regulatory intervention, in which they pledge to support SVB and encourage their partners to “resume” their relationship with the bank if it is “acquired.” and capitalized appropriately.