Too Big to Fail?

The recent sudden collapse of the Silicon Valley Bank (SVB) in the United States and the 1loss of $165 billion to the six leading Wall Street banks2 share sales and squeezed profits came as a surprise to those who believed that the ghosts of the banking crisis had been laid to rest. Some suggest that the sudden collapse of SVB may be attributed to the imposition of higher interest rates and the $11 trillion home loans market affected by the rate rise with results that house prices fell to the lowest level in 20 years in the United States. SVB is not the only medium sized bank to have collapsed in the United States Silicon Valley Bank (SVB) but also other regional banks, such as Silvergate Bank and Signature Bank, also collapsed. Immediate intervention was made by the Federal Deposit Insurance Corporation, the Federal Reserve, Treasury Department, and other financial regulators, to stop the contagion and prevent systemic failure in the system. Similar action was taken by the Bank of England regarding SVB’s where for 14 years, Silicon Valley Bank UK (SVB UK) had been supporting the UK innovation ecosystem, becoming the partner of choice for start-ups, scale-ups, venture capitalists and private equity firms. It is now part of HSBC.