(HorizonPost.com) – The share price of regional banks has fallen in the wake of the collapse of Silicon Valley Bank and Signature bank recently. Most of the assets held by Signature Bank, based in New York, have been purchased by New York Community Bank following its closure on March 12th. It had over $100 billion in assets and went under only two days after the Silicon Valley Bank (SVB). The California institution publicly announced it needed to raise $2 billion when depositors began withdrawing and interest rates rose. It lost 60% of its share value in a single day.
Now a second Californian establishment, First Republic Bank, based in San Francisco, has seen its share price fall by 21%. Furthermore, the LA-based PacWest Bancorp’s shares dropped by 13%. In Ohio, KeyCorp and Fifth Third Bancorp both dropped by 4% while Huntington Bancshares fell by 2%. The figures show a potentially worrying drop in confidence in US regional banks, which risks further deposit withdrawal and share sale, bringing even greater problems for the banks. The concern has prompted President Biden to assure people that the American banking system remains sound.
The day after the collapse of Signature in New York, Biden spoke from the White House and said that people’s deposits would remain safe but that no taxpayer’s money would be used to bail out any financial institutions. He also said those responsible for the collapses would be held to account. “If the bank is taken over by the FDIC, the people running the bank should not work there anymore,” the President said. The FDIC – the Federal Deposit Insurance Corp. – is the government agency responsible for overseeing the banking system. In an effort to restore confidence, the FDIC guaranteed access to accounts for SVB and Signature customers, including those with funds over the $250,000 insurance limit.
The collapse of Silicon Valley Bank, and Signature Bank, represent the second and third largest banking collapses in the history of the United States.
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