In the United States, the authorities promised to secure the deposits of customers of Silicon Valley Bank and Signature Bank.
Most Asian stock markets have been down today, as the closure of two American banks has caused concern about the spread of the crisis to the financial sector. However, the US authorities have promised support for the banks’ customers.
In Tokyo, the Nikkei 225 index ended down 1.1 percent and the broader Topix fell 1.5 percent. Also in Sydney, Seoul, Singapore and Taipei, among others, stock exchange rates have been falling, while in Hong Kong and Shanghai, rates have been on the rise.
Last week, Silicon Valley Bank (SVB), which financed Californian technology companies, announced a multi-billion-dollar stock offering. As a result, customers started withdrawing their deposits from the bank, leading to a cash crisis.
On Friday, US authorities announced that they would take over SVB as a result of the cash crisis. On Sunday, supervisory authorities said they had also closed the New York-based Signature Bank.
The authorities announced a rescue plan
The US authorities announced on Sunday that all SVB customers will be protected and they will be able to access their money again from Monday.
The US Treasury Department, the Federal Deposit Insurance Corporation (FDIC) and the Fed announced the rescue plan in a joint release. According to it, taxpayers will not have to finance the aforementioned rescue plan.
At the same time, the authorities said that the deposits of the customers of Signature Bank, which was closed on Sunday, will also be secured. According to the authorities, there are no additional costs for taxpayers either.
However, according to the release, shareholders and certain unsecured debts are not protected. Similarly, the bank’s top management is excluded from the plan.
Confidence in the banking system is strengthened
According to the US Federal Reserve Board, it is providing additional funding to depository institutions to ensure banks’ ability to meet the needs of their customers.
“Today, we are taking decisive action to protect the U.S. economy by strengthening public confidence in our banking system,” Sunday’s statement said.
The measures are intended to ensure that the banking system can continue to perform its core tasks in a way that promotes strong and sustainable economic growth. These tasks include securing deposits and providing credit to both households and companies.