On Friday morning, Silicon Valley Bank (SVB), which helped so many USD tech startups came a sudden bank run, capital crisis, and collapsed, leaving its high-powered customers and investors in limbo, was taken over by federal regulators. Several forces collided to take down the banker. First the Federal Reserve which began raising interest rates a year to tackle inflation which also eroded the value of long-term bonds that SVB and other banks took advantage during the era of ultra-low near-zero interest rates, yielding SVB’s $21billion bond portfolio was yielding  an average 1.79  per cent – the current year Treasury yield is about 3.9 per cent, as the Fed moved aggressively, higher borrowing costs sapped the momentum of tech stocks that had benefited SVB.

The Venture capital began drying up, forcing startups to draw down funds held by SVB, and this made unrealized losses in. bonds  just as the pace of customer withdrawals was escalating.

Only on last Wednesday, SVB announced it had sold a bunch of securities at a loss, that would also sell $2.25 billion in new shares to shore up its balance sheet. This became a catalyst among key venture capital firms who panicked  and plummeted the SVB’s stock on Thursday morning and by the afternoon it was dragging other bank shares down with it as investors began to fear a repeat of 2007-2008 financial crisis. By Friday morning, trading in SVB shares was halted and it had abandoned efforts to quickly raise capital or find a buyer which was when California regulators intervened, shutting the bank down and placing it in receivership under the Federal Deposit Insurance Corporation. Despite the panic on Wall Street financial analysts did not believe SVB’s collapse would trigger a domino effect  that gripped the banking industry during the financial crisis, as the system is well-capitalised and liquid as it has ever been..

Since  the collapse of Washington Mutual in 2008 , it was the largest failure of US bank. Founded in 1983, SVB  was among the top 20 American commercial banks, with $209 billion in total assets at the end of last year, according to FDIC.