The collapse of Silicon Valley Bank, the second-largest bank failure in U.S. history, has created a ripple effect across the American financial industry.
SVB was taken over by the Federal Deposit Insurance Corporation on Friday after depositors, fearing the bank would soon become unable to pay its debts, began withdrawing money at an alarming rate.
A second entity, Signature Bank in New York, closed Sunday after its customers began withdrawing cash. State regulators said they took over the bank to stabilize financial systems.
Federal regulators said depositors from both banks will get all their money. The Federal Reserve, the Treasury Department and the FDIC said regulators took the unusual step of guaranteeing the deposits because SVB presented a systemic risk to the U.S. financial system.
Wall Street ceased trades of several regional banks, however, when share values rapidly declined in early trading Monday.
How fast did SVB values fall?
Shares of First Republic Bank were stopped after falling 65% in morning trading.
Outside the U.S., Japan’s benchmark Nikkei 225 slipped about 1.2% in morning trading. Australia’s S&P/ASX 200 shed 0.6% to 7,104.30.
European markets also closed lower, with the pan-European Stoxx 600 index down 2.34%.
How do Silicon Valley, Signature Bank failures compare?
SVB, Signature are among largest US banks
SOURCE USA TODAY Network reporting and research; The Associated Press; Federal Reserve; Federal Deposit Insurance Corporation