Silicon Valley Bank collapse: what we know so far

This weekend's sudden failure of the Silicon Valley Bank, which provided financial services for tech startups and venture capitalists, as well as the Californian wine industry, is rippling through the world at the moment.

SVB held US$212 billion in deposits, following a VC boom during the pandemic. 

The bank became insolvent due to long-term bond investments yielding low interest miscalculation and had to sell a tranche of those instruments at a loss. 

It also tried to sell shares to cover the loss, a move that caused panic among depositors who in just a single day withdrew US$42 billion in a run on the bank.

Californian financial authorities have stepped in and SVB went into receivership with the United States Financial Deposit Insurance Corporation (FDIC).

A new bank, the Deposit Insurance National Bank of Santa Clara was created by FDIC to protect account holders and to sell the now defunct SVB's assets.

FDIC guarantees the first US$250,000 of deposits held by each tax entity, with larger sums being uninsured.

ASX listed Nitro Software said it had US$12.2 million in cash at SVB, and Siteminder A$10 million that it couldn't withdraw, and a US$20 million revolving facility.

Overall, ASX-listed companies have said their exposure to SVB is not material.

The bank failure has caused panic among startup founders whose money at SVB is not accessible, and who say they cannot pay staff, bills and may be forced to lay off hundreds of thousands of employees.

Although the US government at first said there would be no bailout of SVB, and the crypto-friendly Signature Bank that went under just days before, financial regulators in the country have now rolled out emergency measures to stem contagion from the collapse.

In a joint statement by the secretary of the US Treasury, Janet Yellen, the chair of the Federal Reserve, Jerome Powell, and FDIC chair Martin Gruenberg, the authorities now say depositors will have access to all their funds on Monday, American time.

No taxpayer money will be used to make depositors whole, the three said.

Shareholders of SVB could lose their money however, and no buyers for the failed bank have materialised so far.