Stock exchanges unsettled worldwide: Authorities close US bank after high losses


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Stock exchanges unsettled worldwide

Authorities close US bank after huge losses

The American Silicon Valley Bank reports a loss – and thus pulls the prices of numerous other financial institutions down. German banks are also affected. US Treasury Secretary Yellen wants to monitor developments closely.

US authorities have shut down troubled Silicon Valley Bank (SVB). According to the public deposit insurance fund FDIC, insured deposits at the California bank were transferred to a bank newly formed by the FDIC called DINB. The 17 branches of the SVB should reopen on Monday under the supervision of this DINB. The holders of insured deposits will then have access to their deposits.

The FDIC is a regulatory deposit insurance fund and plays an important role in the stability of the US banking system. The closure of the SVB was carried out by the California Financial Protection and Innovation Agency.

The problems of the SVB had triggered uncertainty on the stock exchanges worldwide and, in particular, caused bank stocks to collapse in Europe as well. Deutsche Bank’s paper lost almost nine percent of its value by Friday afternoon. The same happened to other major European banks. US Treasury Secretary Janet Yellen expressed concern.

Deutsche Bank 10.54

The background to the development is a message from the SVB on Wednesday evening. The Californian institute with close ties to the technology sector reported a loss of 1.8 billion dollars (1.7 billion euros) on the sale of securities and announced a capital increase. The bank had recently lost many customers in connection with the higher interest rates.

The SVB shares lost around 60 percent of their value on the stock exchange on Thursday. After-hours trading continued down. As a result, papers from other US banks were initially pulled down. The effect continued in Europe and also in Asia on Friday.

Further reports on market events can be found in the stock market day.

Yellen sees “cause for concern”

Société Générale lost more than six percent on the Paris stock exchange by Friday afternoon, the shares of the Italian Unicredit were almost four and a half percent in the red and that of the British Barclays Bank almost five percent. The development pushed the leading European indices such as the German share index (DAX) into the red. The stock exchanges in Tokyo, Shanghai and Hong Kong had previously closed in the red.

Silicon Valley Bank
Silicon Valley Bank 37.00

Wall Street also started with losses, with bank stocks in particular again in the red. The SVB share was initially suspended from trading, and the bank was later closed. US Treasury Secretary Yellen told a congressional committee that there were “developments regarding some banks that I am monitoring very closely.” If banks suffered financial losses, this is “cause for concern”.

The SVB crash “raised fears that other banks could face similar problems,” said Ipek Ozkardeskaya of Swissquote Bank. Jens Nordvig of Exante Data and Market Reader pointed out that there had been a long period of zero interest rates, during which banks “functioned in a certain way”. Some institutes are now having difficulties because they are confronted with “completely different conditions”.

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