Easing concerns about Silicon Valley collapse

The collapse of three US banks in less than a week has sent shockwaves through the financial industry, with global stocks plunging and public confidence shaken.

The aftermath of their closures could linger in the weeks ahead, creating an obstacle for the Federal Reserve in its fight to tame inflation.

BANK RUN

Last Wednesday, the tech industry panicked when Silicon Valley Bank (SVB) revealed huge losses, prompting a rush by startups to pull out their money from the 40-year-old institution. Based in Santa Clara, California, SVB provided banking services to nearly half of the US venture capital-backed technology and life-science companies, as well as more than 2,500 venture capital firms, the company’s website said.

SVB sold a US$21 billion bond portfolio, consisting mostly of US Treasuries. The portfolio was yielding an average of 1.79%, far below the current…