Just hours before the authorities closed down Silicon Valley Bank, the bank apparently paid employees annual bonuses. However, the US government is not planning a major rescue operation.
According to a media report, the Californian Silicon Valley Bank (SVB) paid out annual bonuses shortly before its collapse. Eligible employees of the money house would have received their performance bonuses a few hours before the closure by the US government, reports the US news website Axios.
SVB, which specializes in financing tech start-ups, was shut down by regulators on Friday after its shares posted a record one-day loss on Wall Street on Thursday, wiping out around $80 billion in market values.
The closure of Silicon Valley Bank also has massive consequences for the crypto industry. Stablecoin provider Circle, which is one of the bank’s clients, parked $3.3 billion at SVB. Overall, the company has reserves of around $40 billion. Users then wanted to exchange the USDC stablecoin issued by Circle for dollars. The token temporarily lost its peg to the dollar as a result, but later recovered most of its losses.
US Treasury Secretary tries to calm down
According to Treasury Secretary Janet Yellen, the US wants to take care of account holders after the bank collapse without a major bailout. During the financial crisis, the state jumped to the side of investors and shareholders of systemically important banks, Yellen told CBS on Sunday. However, reforms enacted since then meant that such a move would not be repeated. “But we care about the depositors and are focused on meeting their needs.” After the bankruptcy of the US bank SVB, the financial markets are concerned about further collapses. In the USA, but also in Great Britain, the case caused crisis meetings at the weekend.
The aim is to prevent the bankruptcy from affecting other companies. The bank, which specializes in financing technology companies in California, is already putting pressure on numerous start-ups that are now having problems continuing to pay their employees. Experts blame the strong interest rate hikes in the US for the problems of the SVB.