Silicon Valley Bank, the second largest failure in US history, has collapsed.
The bank’s failure was caused by a significant drop in the value of their long-term bond portfolio due to the rise in interest rates.
Despite being insured, shareholders will not receive compensation, while depositors will be reimbursed by the US government.
Although smaller regional banks such as Pacquest and ETC America’s shares have plummeted, larger banks such as City Group and JP Morgan have not been affected.
The collapse of Silicon Valley Bank was not due to reckless lending, but rather a lack of confidence from investors.
The situation is still developing, but for now, the US government has managed to limit the damage.
