Amid US administration’s move to backstop collapsed Silicon Valley Bank’s (SVB) despoits, IT minister Ashwini Vaishnaw has said the developments are ”reassuring” and will bring relief to startups.
The Biden administration in the US has announced that depositors of the failed Silicon Valley Bank will have access to their money from Monday. Federal regulators have stepped to back all SVB deposits.
”SVB resolution is reassuring. (It) will bring relief to startups,” Vaishnaw told PTI.
US President Joe Biden on Monday sought to reassure Americans that they can have confidence that the US banking system is ”safe” and vowed stricter bank regulation after a string of bank failures raised concerns about the nation’s financial stability.
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After receiving recommendations from the boards of the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve, and consulting with the president, US Treasury Secretary Janet Yellen on Sunday approved actions enabling the FDIC to complete its resolution of the Santa Clara, California-based Silicon Valley Bank in a manner that fully protects all depositors.
Shock waves from the fall of Silicon Valley Bank, however, continued to roil global bank stocks as assertions from President Biden and regulators did little to soothe broader market worries.
However, the US administration’s stance did bring much-needed hope to startups which have been grappling with ways to retrieve deposits locked with the California lender. Startups are working with Indian and international banks to figure out ways to move their funds after the US regulator made accounts accessible to depositors. Banks are in talks with startups to expedite account opening at bank branches at International Financial Services Centre in Gujarat’s Gift City. Startups, who banked with SVB but have accounts in alternate US banks, are looking to shift funds.
The failure of Silicon Valley Bank last week left many startups, tech companies, entrepreneurs and VC funds nervous and jittery. SVB, the 16th largest bank in the United States, was closed on Friday by the California Department of Financial Protection and Innovation which later appointed the FDIC as its receiver.
SVB was deeply entrenched in the tech startup ecosystem and the default bank for many high-flying startups. Its abrupt fall marked one of the largest bank failures since the 2008 global financial crisis. The bank failed after clients — many of them venture capital firms and VC-backed companies that the bank had cultivated over time — began pulling out their deposits, creating a run on the bank.
The UK government announced on Monday that it has facilitated London-based banking major HSBC to buy the embattled UK arm of Silicon Valley Bank for 1 pound, securing the deposits of more than 3,000 customers worth around 6.7 billion pounds.