Silicon Valley Bank collapse LIVE: Stock news as US and UK markets brace for financial contagion

As Asian markets opened on Tuesday morning it became evident global financial stocks were going to continue to suffer in the wake of the SVB collapse.

The MSCI Asia Pacific Financials Index - which includes securities across several Asian countries - dropped by 2.7 percent to the lowest it was since November 29, Bloomberg reported.

Japanese financial services company Mitsubishi UFJ Financial Group Inc. dropped by 8.3 percent in Japan.

In South Korea Hana Financial Group Inc. fell 4.7 percent.

Silicon Valley Bank N.A.’s new CEO Tim Mayopoulos said in a letter to clients on Monday that the lender is open and conducting business as usual.

All the existing and new deposits are protected by the FDIC, according to the letter, which was seen by Reuters.

It added that the bank was conducting business as usual in the US and expected to resume international transactions in the next few days.

FDIC had appointed Mayopoulos as CEO of the newly created entity, named Silicon Valley Bank N.A, after the regulator took control of SVB following its collapse, which crippled stocks and triggered concerns of a contagion throughout global markets.

After being temporarily taken down, the Silicon Valley Bank website (www.svb.com) has been relaunched to function on behalf of the US Federal Deposit Insurance Corp (FDIC).

‘Silicon Valley Bridge Bank, N.A. is a newly created, full-service FDIC-operated “bridge bank”. The bank is open for business and new and existing depositors have full access to their money,’ said a notice at the top of the new site, which used the same URL as the old site.

The regulator transferred all deposits of Silicon Valley Bank to this newly created bridge bank and had said all depositors will have access to their money beginning Monday morning.

Some investors are looking to buy pieces of Silicon Valley Bank, according to a report from Bloomberg.

Apollo Global Management Inc. expressed interest in buying a book of loans held by Silicon Valley Bank, it was reported on Monday evening.

The bank had $73.6 billion of loans as of December, 2022, but it is not clear how large the loan book in question was.

After the Federal Deposit Insurance Corp. seized the bank on Friday it hosted an auction over the weekend to sell it, but no buyer emerged.

On Monday, the Wall Street Journal reported that regulators would take another stab at auctioning the bank.

Republican presidential candidate Nikki Haley took to Twitter on Monday to describe the federal government’s attempts to protect Silicon Valley Bank customers as a ‘bailout’.

The former South Carolina governor argued that ‘now depositors at healthy banks are forced to subsidize Silicon Valley Bank’s mismanagement’.

Haley suggested the bank’s assets should instead be sold off.

‘When the Deposit Insurance Fund runs dry, all bank customers are on the hook. That’s a public bailout. Depositors should be paid by selling off Silicon Valley Bank’s assets, not by the public. Taxpayers should not be responsible,’ Haley said in a tweet.

Some analysts think the ripple caused by the SVB collapse will cause the Federal Reserve to drop interest rates. The central bank is set to announce its latest interest rate decision in a little over a week.

‘In reaction to looming financial stability risks, we now expect the Fed to cut rates in 25 basis point increments in the March FOMC meeting in comparison to where we had previously expected a 50bp rate hike since 24 February,’ said analysts at the investment bank Nomura.

SVB’s demise began after it made major investments in US government bonds, backed by mortgages and with low interest rates.

As the Fed started to hike interest rates last year those bonds dropped in value and the bank's debt-to-asset ratio became increasingly precarious.

San Francisco-based First Republic finished down 62 per cent in New York after having fallen as much as 75 percent earlier in the day.

Arizona-based Western Alliance Bank was the second-worst performer and closed 49 percent down.

Shares in Utah-based Zions were down more than 25 percent and LA-based PacWest was down 45 percent.

The Silicon Valley Bank collapse may have been triggered by a newsletter authored by a tech expert in Texas in the last week of February.

In the wake of the bank's collapse, one tech writer, Evan Armstrong, pointed out a mail-out authored by fellow writer Bryne Hobart, dated February 23.

'This entire debacle was potentially caused by [Hobart]'s newsletter,' wrote Armstrong, who then shared his own post detailing how Hobart may have knocked over the first domino. 

'Pretty much every VC I know reads this newsletter,' said Armstrong, suggesting that as venture capital executives became wary of Silicon Valley Bank their fears spread like a contagion.

The Federal Reserve Board announced on Monday that Vice Chair for Supervision Michael Barr will lead a review of the supervision and regulation of Silicon Valley Bank.

'The events surrounding Silicon Valley Bank demand a thorough, transparent, and swift review by the Federal Reserve,' Chairman Jerome Powell said in a statement.

The review will be publicly released on May 1.

SVB Financial Group, as well as its CEO Greg Becker and CFO Daniel Beck, were sued Monday by shareholders who accuse them of concealing how rising interest rates would leave the Silicon Valley Bank 'particularly susceptible' to a bank run.

The proposed class-action suit seeks unspecified damages for SVB investors between June 16, 2021 and March 10, 2023.

Hedge fund boss Bill Ackman warned the 'economy will not function' unless Joe Biden 'guarantees all deposits now' as the contagion spread to the Big Four trillion-dollar US banks. Wells Fargo's stock dropped 7.5 percent, Bank of America fell 7.4 percent, Citigroup plunged 5.8 percent and JP Morgan was down 2.7 percent. 

Among the worst affected regional banks was Western Alliance, which saw its stock dive by 75 percent as the opening bell sounded. Trading circuit breakers were also imposed on First Republic as its price fell by two thirds and PacWest which dropped by 35 percent.

'Our economy will not function effectively without our community and regional banking system. Therefore, the Federal Deposit Insurance Corporation needs to explicitly guarantee all deposits now. Hours matter,' Ackman said.

Executives at Silicon Valley Bank focused on woke initiatives to increase diversity amongst its ranks and invest in startups promoting a 'healthier planet,' but failed to spot its glaring problems with investments as interest rates rose.

The now-failed bank had an A rating for its Environmental, Social and Governance policies according to the MSCI index after creating its own initiatives to 'advance inclusion and opportunity in the innovation economy' and investing in clean energy solutions over the past few years.

But for eight months last year, the bank did not have a chief risk operator, as it invested clients' money in low-interest government bonds and securities.

Then when the Federal Reserve increased interest rates, the value of SVB's assets fell while customers tried to withdraw their money.

Now, many are slamming the financial institution for focusing too much on woke policies and not enough on its investments. 

 First Republic finds itself at the eye of the storm after being sucked into the financial crisis sparked by the collapse of Silicon Valley Bank.

Shares nosedived 67 percent in Monday morning trading while panicked customers raced to branches to empty their accounts of their huge savings.

Meanwhile trading circuit breakers were swiftly imposed to protect the market from rampant volatility as Wall Street traders tried to shut the floodgates.

It is a far cry from a few months ago, when fancy-clad First Republic bankers flocked to San Francisco for a no-expense-spared Wonka-themed Christmas party.

A start-up founder says that the collapse of SVB has plunged her small business into crisis – leaving her unable to pay her employees as Etsy sellers fear that they won't be able to pay their rent after being left with nothing as funds continue to be frozen.

CEO of Strongsuit, Lindsey Michaelides, founded the company in 2018  and has been left unsure of how her business could recover – urging people to understand it is not just the 'tech elite' who have been affected.

The mother-of-four learned of the 'precarious' situation with her bank on Thursday, and removed all off the funds to a different bank bar $250k to cover expenses and payroll of 15 staff.

Trading was temporarily halted in dozens of regional banks this morning as shares fell by up to 75 percent when the market opened after Joe Biden claimed 'US banking is safe.'

Major US banks were also hit as contagion fears spread through the sector with Wells Fargo plummeting 7.5 percent, Bank of America falling 7.4 percent, Citigroup plunging 5.8 percent and JP Morgan down 2.7 percent. 

Regional bank Western Alliance saw its stock price plunge by three quarters as the opening bell sounded on Wall Street, while shares in First Republic dived 67 percent and PacWest by more than 35 percent. Trading circuit breakers were swiftly implemented to protect the market from rampant volatility.

In her own remarks Monday, New York Gov. Kathy Hochul announced that customers who have uninsured funds at Signature Bank will be reimbursed.

She said New York Department of Financial Services officials started looking at its own banks following the collapse of SVB and identified Signature Bank as being at risk.

The FDIC is now in control of that bank as well, which remained open on Monday as federal officials look for a prospective buyer.

All of those who had uninsured funds at the bank will also be compensated using fees assessed on banks by the FDIC.

'New Yorkers should have confidence that their money is secured,' Hochul said.

Among Silicon Valley Bank's clients were Roku, Vox Media and popular gaming company Roblox.

Roku, the streaming service, said in a US Securities and Exchange Commission filing on Friday that roughly $487 million —or 26 percent — of its $1.9billion in cash was held at Silicon Valley Bank. Most of those deposits were uninsured.

Roblox also said in a filing that about 5 percent of its $3 billion in cash and securities were held at the bank.

And Vox Media, the publisher of New York Magazine and The Verge, also has a substantial concentration of cash at the bank and used credit cards that were issued by the failed institution.

In his remarks on Monday, President Joe Biden blamed former President Donald Trump for passing legislation deregulating the banking industry.

Sen. Elizabeth Warren also tweeted: 'Bank failures are the direct result of leaders in Washington weakening the financial rules.

'In 2018, President Trump signed a law rolling back critical protections.

'I fought these changes. I warned that banks would run up risk. I wish I’d been wrong.'

President Joe Biden briefly addressed the nation Monday morning, 30 minutes before the U.S. markets opened to avoid a full-blown run on the banks and reassure depositors of Silicon Valley Bank that their money will be available if they want to withdraw.

He insisted that taxpayers will not have to help bail out SVB and Signature Bank – and celebrated job gains and low unemployment rates in the midst of the second-largest banking collapse in U.S. history.

In a speech Monday morning, President Joe Biden revealed that investors at Silicon Valley Bank will not be protected.

He said they made a risk by investing, and that risk failed, noting: 'That's how capitalism works.'

He also said, none of the losses will be born on the taxpayers, but will rather be paid by the fees banks pay the federal government.

'The bottom line is: Americans can rest assured that our banking system is safe, your deposits are safe,' the president said.

Banks across America are sitting on $620 billion of 'unrealized losses' - assets which have decreased in value but have not yet been sold - - the head of the Federal Deposit Insurance Corporation warned.

The ticking time bomb is due to U.S. banks buying Treasuries and bonds while interest rates were low, but, with interest rates now rising, finding these bonds have declined in value.

When interest rates rise, newly issued bonds start paying higher rates to investors, which makes the older bonds with lower rates less attractive and less valuable.

Most banks and pension funds are affected.

Silicon Valley Bank customers started lining up outside of one of its franchises more than four hours before the bank opens to ensure they get their money back.

Federal regulators had announced they are taking emergency measures to ensure that customers will have access to their funds.

SVB Financial Group announced Monday morning that its board has approved a 'restructuring committee' comprising five 'independent directors to explore strategic alternatives for the holding company and its SVB Capital and SVB Securities businesses.

'The committee will explore all alternatives for addressing the approximately $3 billion of funded debt held by the holding company, which is recourse only to SVB Financial Group and is not guaranteed by the subsidiaries,' a press release reads.

The SVB restructuring committee includes Eric Benhamou, Tom King, Kay Matthews, Mary Miller and Kate Mitchel, according to David Gura, an NPR correspondent.

Bank shares have plummeted up to 74 percent in pre-market trading, with First Republic Bank's shares dropped as low as $21.50 from a high of $81.76 amid fears of a banking rout when Wall Street opens trading at 9.30am.

President Joe Biden is now due to speak at 8am in an attempt to shore up trust in the sector after the White House yesterday guaranteed it would make SVB customers 'whole' and that 'no losses will be borne by the taxpayer.'

Biden is due to speak at 8am in an attempt to shore up trust in the sector after the White House yesterday guaranteed it would make SVB customers 'whole' and that 'no losses will be borne by the taxpayer.'