California: Silicon Valley Bank, a four-decade-old US leader, collapsed into Federal Deposit Insurance Corporation (FDIC) receivership. This is one of the largest bank failures after 2008 financial crisis. Further, its long-established customer base of technology start-ups grew worried and yanked deposits. On Friday, global markets took a beating as US jobs boosted the likelihood of further aggressive interest rate hikes.
US Federal Reserve raising interest rates aggressively to rein in inflation. The value of the existing bonds were issued at a lower interest rate has fallen. Another facet to this was a decline in funding for start ups as the venture ecosystem took its foot off the gas pedal. Indian investors and SaaS startups are rattled by the development in the US and some are closely tracking the developments.
Earlier on Thursday, the SVB Financial Group announced that it was raising $2.5 billion in a share sale. Additionally, it sold $21 billion worth of securities from its portfolio. Wall Street’s top indices had managed to peek into the green before regulators closed the troubled Silicon Valley Bank, while bank shares wobbled amid its collapse. The stocks were sent tumbling into the red again.