Schmotta also said investors need to brace themselves for a "very turbulent period ahead. "That is unfortunately a drag on Canada's longer-term productivity," he said. While Schmotta said the impact of the seizure in Canada won't be huge, the loss of the bank from the Canadian venture sector "will clearly diminish the flow into that sector over the coming months and years." The move ensured the security of 6.7 billion pounds ($11.1 billion Cdn) of deposits. WASHINGTON The nation’s top financial regulators will face a grilling from lawmakers on Tuesday over the collapse of Silicon Valley Bank as they push to understand why the firm was allowed. Treasury and the Bank of England said Monday that they had facilitated the sale of Silicon Valley Bank UK to HSBC, Europe's biggest bank, for the nominal sum of one pound. Karl Schmotta, chief market strategist for Corpay, said OSFI's move means they'll look to sell off the assets of the Canadian unit and essentially "ringfence" the Canadian banking sector against any further systemic risk that could come from the collapse. Canada's top banking regulator takes temporary control of Silicon Valley Bank's Canadian branch.Canada, other governments hustle to stop potential banking crisis after Silicon Valley Bank collapse.history, after the collapse of Washington Mutual in 2008. The bank's collapse was the second-biggest bank failure in U.S. government stepped in on Friday to seize Silicon Valley Bank's assets, which have been transferred to a new entity. As customers made demands for their money, the bank had to unload its bond investments at a loss.Įventually, the bank became effectively insolvent. At the same time, the bank was using those deposits to invest in bonds.Īmid the current trend of rising interest rates, the bonds the banks had invested in were paying less than bonds issued more recently. Two factors: a slowdown in venture capital funding in the tech sector and rising interest rates.įaced with limited ability to raise new capital, some of the bank's customers had to tap into their deposits to meet their obligations. Who used the bank?Īs one might expect from its name, the bank catered to firms in the technology sector, as well as the health-care sector. Federal Deposit Insurance Corporation said. At the time of its failure, the bank, which had its base in Santa Clara, Calif., had $209 billion US in total assets, the U.S. Silicon Valley Bank was the 16th-largest bank in the U.S. Here's a quick look at the situation: What was Silicon Valley Bank?
The collapse last week of Silicon Valley Bank, as depositors clamoured for their money, has sent ripples through the financial system.
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