‘It isn’t a one off’: Financial markets brace for more pain from Silicon Valley Bank ‘death spiral’- with First Republic, Pac West and Signature Bank stocks down by up to 50% and tech giants unable to access frozen BILLIONS

The sudden collapse of Silicon Valley Bank has sent financial markets into a frenzy, as experts warn it may not be a ‘one off’ and brace for the next domino to fall.

California regulators shuttered the bank on Friday after a run-on deposits pushed it into crisis, causing the largest US bank failure since the 2008 Great Recession.

The ripple effect has already hit similar institutions, such as New York’s Signature Bank, which saw its share price plummet 23 percent before trading was halted when the news of SVB’s demise came in.

The share price of First Republic, the 16th largest bank in America, also crashed by 14.8 percent and Pac West dropped by 37.9 percent.

University of San Diego finance professor Dan Roccato cautioned that while SVB was ‘a niche bank’, more firms are likely to face troubling times ahead.

‘I don’t think we’re going back to where we were in 2008 necessarily, but these things aren’t one-offs’ he told Fox News. ‘My suspicion is we’re going to see a few more of these things creep up.’

Silicon Valley Bank’s monumental downfall is the second-largest bank collapse in U.S. history.

Its demise on Friday, which has left customers fearful of losing deposits totaling tens of billions of dollars, is eclipsed only by the failure of Washington Mutual in 2008, which had assets of $307 billion when it went into receivership.

SVB was more niche, specializing in supporting tech startups, and its dependency on a small corner of the economy put it at increased odds with a struggling US economy than its larger competitors.

But as soon as news hit that SVB collapsed, similarly intertwined companies found themselves needing to act quickly.

Investors in other regional banks such as First Republic Bank quickly jumped ship, with the firms’ share prices tanking upwards of 50 percent Friday before recovering to 14.8 percent at market close.

PacWest Bancorp was also among the banks feeling the heat, dropping 37.9 percent by the end of Friday.

And the impact is stretching past Wall Street. Streaming giant Roku, for example, says 26 percent of its cash reserves – over $480 million – are tied up in SVB.

As of Saturday, the company’s stock had fallen by over 42 percent since this time last year, despite bosses insisting they can pay their bills.

In 2021, when interest rates were near zero and easy money flooded the economy, venture capital investments in startups surged to a record high of $671 billion in the US, according to KPMG.

That also meant booming business for SVB, as the bank’s startup clients increased their deposits with the bank, which roughly doubled in 2021.

Those deposits helped SVB aggressively expand its loan portfolio. But as Professor Roccato explained, the bank’s failure to cover its costs amid rising interest rates led it into a ‘death spiral’.

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By Published On: March 11, 2023Categories: UncategorizedComments Off on ‘It isn’t a one off’: Financial markets brace for more pain from Silicon Valley Bank ‘death spiral’- with First Republic, Pac West and Signature Bank stocks down by up to 50% and tech giants unable to access frozen BILLIONS

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About the Author: Patriotman

Patriotman currently ekes out a survivalist lifestyle in a suburban northeastern state as best as he can. He has varied experience in political science, public policy, biological sciences, and higher education. Proudly Catholic and an Eagle Scout, he has no military experience and thus offers a relatable perspective for the average suburban prepper who is preparing for troubled times on the horizon with less than ideal teams and in less than ideal locations. Brushbeater Store Page: http://bit.ly/BrushbeaterStore

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