Parent company of Silicon Valley Bank files for bankruptcy

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The parent company of Silicon Valley Bank, seized last week by the federal government, has filed for federal protection for failure.

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SVB Financial Group, together with its CEO and CFO, was the subject of a class action lawsuit according to which the company did not disclose the risks what future interest rate increases meant for their businesses.

SVB Financial Group is no longer affiliated with Silicon Valley Bank after the surgery by the Federal Deposit Insurance Corporation (FDIC, for its acronym in English, an independent federal agency that guarantees depositors that they will recover their savings if a bank fails).

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The bank’s successor, Silicon Valley Bridge Bank, is operated under the jurisdiction of the FDIC and it is not included in the bankruptcy protection order.

The fall of the SVB produced shocks in the financial system.  Photo: Reuters

The fall of the SVB produced shocks in the financial system. Photo: Reuters

SVB Financial Group, which believes it has $2.2 billion in cash, has filed for bankruptcy in a New York court to try to a capital restructuring, under judicial control, of the companies on which the authorities intervened, reported the Wall Street Journal.

The US authorities intervened last Thursday SVB, but not your matrix.

The move by the government and regulators came after SVB, which specializes in tech start-ups suffered a massive flight of deposits after being forced to sell assets to cover liquidity needs.

The Government guaranteed all the deposits of this institution and reopened it under new management and with the name of Silicon Valley Bridge Bank, with the intention that you can recover your activities.

The SVB’s intervention unleashed a financial earthquake whose shocks reached Europe, where banks recorded losses fearing a contagion effect. At the same timebut for different reasons the Swiss bank Crédit Suisse fell, also to be saved. Despite this, credit stocks continued to fall on Friday.

After the SVB debacle, the authorities intervened by the regional bank Signature, and on Thursday the country’s major banking firms rushed to the rescue of First Republic Bank, which is among the 15 largest banks in the country and is one of the hardest hit by the fallout from this crisis, with an injection of 30,000 million dollars.

AP and EFE

Source: Clarin

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