The Untold Story of Silicon Valley Bank and Signature Bank's Downfall: Lessons Learned from Bank Failures
On March 9th, Silvergate Bank, a small bank in the USA, announced bankruptcy. The next day, Silicon Valley Bank (SVB), the 16th largest bank in the USA, also declared insolvency, followed by Signature Bank, the 20th largest bank, on March 12th. The bankruptcy of SVB and Signature Bank became the second and third largest bank failures in American history. The impact was severe, with the stock prices of small and medium-sized banks plunging between 20% and 80%, and more than 20 banks suspending trading. In contrast to the average of about three banks closing down each week in the US, this was a significant event because of the volume and the quality of the banks that failed. SVB was established in 1983 and listed on NASDAQ in 1988, focusing on deposit and loan business for start-up companies, particularly those in Silicon Valley. Their clients included almost half of US tech and life science start-ups. Although they had nearly 9,000 employees, their physical branches were less than 20, a