US regulators have announced the closure of Silicon Valley Bank (SVB) on Friday. Not only this, the regulators have also attached all the assets of the bank. Meanwhile, Billionaire Elon Musk has expressed his desire to buy Silicon Valley Bank.

In fact, Razer CEO Min-Liang Tan recently wrote in a tweet, ‘I think Twitter should buy Silicon Valley Bank (SVB) and make it a digital bank.’ Responding to this tweet by Min-Liang Tan, Twitter and Tesla CEO Elon Musk wrote, ‘I welcome this idea.’ This tweet of Musk is also becoming quite viral.

Silicon Valley Bank, which gave loans to technology companies and startups around the world, has now gone bankrupt. This continuously failing bank entered the retail banking sector in 2008. However, billions of dollars of investors and companies have been trapped because of this badly failed bank.

Biggest failure since 2008 financial crisis
Silicon Valley Bank, the 16th largest US bank, was ordered by regulators to close on March 10. California’s Department of Financial Protection and Innovation issued this order. Shares of the bank’s parent company SVB Financial Group fell by nearly 60% on March 9. After this it was stopped for trading. This is the biggest failure in US history since the 2008 financial crisis.

According to Reuters, US banks have lost $ 100 billion in the stock market in the last 2 days due to the fall in SVB’s shares. At the same time, European banks have suffered a loss of 50 billion dollars. The Federal Deposit Insurance Corporation (FDIC) announced on Friday the Silicon Valley Bank takeover. Along with this, he has also been given the responsibility of keeping the money of the customers safe. Silicon Bank will now open on March 13, after which all insured depositors will be free to withdraw their deposits.

Only deposits up to Rs 2.5 crore will be returned
The bank had assets of $209 billion and deposits of $175.4 billion by the end of 2022. 89% of this amount was not insured. Customer deposits up to $250,000 (Rs 2.5 crore) are covered by FDIC insurance. That is, even after the closure of the bank, this money will be returned to the customer. At the same time, there is no guarantee that the depositors who have deposited more than this amount in their accounts will get all their money back or not. However, the FDIC will issue a certificate to such customers. Under this, after the fund is recovered, the money will be returned to them first.

Understand the collapse of Silicon Valley Bank in a sequential manner
Silicon Valley Bank had $ 189 billion in deposits in 2021. Silicon Valley Bank had bought several billion dollars of bonds with the money of its customers in the last 2 years, but it did not get proper return on this investment due to low interest rate. Meanwhile, the Federal Reserve Bank increased interest rates for tech companies.

Most of SVB’s clients were start-ups and tech companies that needed funding for their businesses. In such a situation, she started withdrawing money from the bank. Investors in tech companies reduced due to rising interest rates. Due to non-availability of funding, the companies also started withdrawing their remaining money from the bank. Due to frequent withdrawals, the bank had to sell its assets.

On March 8, SVB reported that it had sold several securities of the bank at a loss. Also, to strengthen its balance sheet, it announced the sale of new shares worth $ 2.25 billion. This created an atmosphere of fear among many big capital firms and the firms advised the companies to withdraw their money from the bank.

After this, the stock of SBV declined on Thursday, due to which the shares of other banks also suffered heavy losses. The shares of SVB were put on hold till Friday morning after investors were not found. In addition, several other bank stocks were also temporarily blocked on Friday, including First Republic, PacWest Bancorp and Signature Bank.