California-based Silicon Valley Bank (SVB), the 16th largest bank in the United States, saw a stunning collapse and was closed by the California Department of Financial Protection and Innovation on Friday. The company was taken over Friday by the US Federal Deposit Insurance Corporation (FDIC) to prevent further damage.
As the collapse raised fears of a wider tech sector fallout, Israeli Prime Minister Benjamin Netanyahu warned on Saturday that the implosion of SVB created a deep crisis in the technology industry. He said that he is closely monitoring the collapse of the American investment bank
The collapse of SVB, the second largest bank failure in US history, led to a major crisis in the high-tech world, said Netanyahu in a tweet. The Israeli PM assured that the country would help Israeli firms “if needed”.
“If necessary, out of responsibility to Israeli high-tech companies and employees, we will take steps to assist the Israeli companies, whose center of activity is in Israel, to weather the cash-flow crisis that has been created for them due to the turmoil,” he tweeted.
Netanyahu said that the Israeli economy is strong and stable, adding “which finds expression in this crisis as well. Netanyahu, who is in Rome for an official visit, said he would discuss the extent of the crisis with his finance and economy ministers and the central bank governor once he returned home.
“From Rome I have held talks with senior high-tech figures in Israel. Upon my return to Israel I will discuss the scope of the crisis with the Finance and Economy ministers and the Governor of the Bank of Israel,” tweeted Netanyahu.
The collapse of Silicon Valley Bank
Silicon Valley Bank, whose website says it is “the financial partner of the innovation economy,” collapsed after a stunning 48 hours in which a bank run and a capital crisis led to the second-largest failure of a financial institution in US history. It’s decline stems partly from the Federal Reserve’s aggressive interest rate hikes over the past year.
After years of interest rates hovering around zero, the central bank last spring began a series of historic rate hikes to make borrowing for businesses and individuals more expensive — a way to cool the economy and bring inflation in line. Silicon Valley Bank is the first FDIC-insured institution to fail this year. The last FDIC-insured institution to close was Almena State Bank, Almena, Kansas, on October 23, 2020.
