The world’s most powerful central banks could be forced to stop raising interest rates after the Silicon Valley Bank crisis, economists have said, amid growing signs of financial stress linked to rapid increases in borrowing costs over the past year.
Analysts said the US Federal Reserve would probably leave interest rates on hold at its decision next week, as the meltdown at the California-based technology lender ripples through global financial markets.
The bankruptcy of the Californian Silicon Valley Bank (SVB) is not comparable to the bankruptcy of the US investment bank Lehman Brothers, which triggered the global financial crisis in 2008.
Swiss financial regulator FINMA on Monday said it was seeking to identify any potential contagion risks for the country's banks and insurers following the collapses of Silicon Valley Bank (SIVB.O) and Signature Bank (SBNY.O).
Shares in Swiss banks slumped along with others in the sector globally after moves by U.S. authorities to guarantee deposits of the two lenders failed to reassure investors
Credit Suisse (CSGN.S) shares hit a new low, while the cost of insuring its debt against a default rose to an all-time high. Shares of Swiss rival UBS (UBSG.S) dropped.
Only the collapse of Washington Mutual was larger than SVB's meltdown, per the chart from strategist Charlie Bilello below.
The Companies Known to Be Impacted So Far (Besides Banks)
Roku: The streaming player had $487 million, or 26% of its $1.9 billion in cash at Silicon Valley Bank. "At this time, the company does not know to what extent the company will be able to recover its cash on deposit at SVB," Roku said in a disclosure.
Etsy: The e-commerce company is reportedly delaying some payments to sellers as it used SVB to facilitate disbursement. "At Etsy, supporting our sellers is our highest priority, and we understand how important it is for these small businesses to be able to receive their funds when they need them. We recently experienced a delay in issuing payments to some sellers related to the unexpected collapse of Silicon Valley Bank. Our teams have been working around the clock to implement a solution, and we expect to pay sellers via our other payment partners within the next several business days," an Etsy spokesperson told Yahoo Finance via email.
Rocket Labs: Space startup Rocket Labs disclosed it had about $38 million on deposit at SVB, or 7.9% of its total cash. "92% of Rocket Lab's cash and cash equivalents are held by other financial institutions, so we are not facing a liquidity issue and do not expect it to impact our operations at this time.The process for recovering all, or a portion, of Rocket Lab’s funds with SVB will be a highly regulated one that will play out over time, and we’ll monitor its progress closely,"
Roblox: "Of Roblox Corporation’s $3 billion of cash and securities balance as of February 28, 2023, approximately 5% is held at Silicon Valley Bank. Thus, regardless of the ultimate outcome and the timing, this situation will have no impact on the day to day operations of the company," the metaverse play said in a disclosure.