Global Financial Crisis Looms as US Second-Largest Bank Crumbles After Customers Withdraw N19trn in 48hrs
- America’s second-largest bank, Silicon Valley Bank, collapsed after it failed to raise funds to shore up its capital
- The announced that it is selling off some of its shares to raise more funds, leading to mass withdrawal
- The Federal Deposit Insurance Corporation moved in on Friday, February 10, 2023, to secure customers’ funds
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Silicon Valley Bank, America’s second-largest bank, collapsed on Friday, February 10, 2023, 48 hours after the bank said it is looking to raise more funds.
Regulators closed the bank, regarded as a tech lender, and placed it under the control of the US Federal Reserve Insurance Corporation, acting as a receiver.
Customers to get their insured deposits in days
The development means that the Federal Deposit Insurance Corporation will liquidate the bank’s assets to pay back customers, including depositors and creditors.
The FDIC, equivalent to Nigeria’s NDIC, is an independent government agency that measures bank deposits and supervises financial institutions. FDIC will give access to customers’ fully insured deposits by the following Monday, February 13, 2023.
CNN reports that on Wednesday, February 8, 2023, the bank announced it sold some of its securities at a loss and would sell for $2.25 billion in new shares to raise its balance sheet.
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Source: Getty Images
Customers rush to withdraw funds
The news caused panic among venture capitalists, which rush to withdraw their funds.
The bank’s shares fell on Thursday, February 9, 2023, and dragged other banks down.
Other banks temporarily halted their stocks, including renowned banks.
Analysts believe the company’s fall comes from increased interest rates as startups withdrew their deposits to keep their companies running. The bank struggled to stay afloat and has now been forced to sell all its available bonds at about $1.8 billion.
Nigeria's NDIC asks depositors of 20 failed banks to come for claims payment
Legit.ng earlier reported that the Nigeria Deposit Insurance Corporation (NDIC) has called on customers of 20 failed banks in Nigeria to go for verification and payment of their deposits that are more than the guaranteed sums known as liquidation dividends.
The Managing Director and Chief Executive Officer of NDIC, Bello Hassan, called while delivering a speech at the Corporation’s special day at the 36th Lagos International Trade Fair.
Hassan said through the hard work of the Corporation in liquidating the banks. It has realized enough funds to settle all failed bank depositors fully.
Source: Legit.ng
