It is the second largest US bank failure: The Silicon Valley Bank is broke. She was important to the tech ecosystem. What this means for the iPhone maker.
The turbulence in the American banking sector is also making Apple investors nervous. Over the past five days, Apple’s shares on the US technology exchange NASDAQ have fallen a total of 2.1 percent, although they were up 1.3 percent on Monday. The wild vibes are direct effects of the bank crash that’s unfolding in California right now. A closer look shows, however, that Apple seems to be less affected here. However, the entire ecosystem was affected.
Second largest banking collapse in US history
It was nothing less than a financial earthquake that took place in California’s high-tech mecca at the end of last week: The Silicon Valley Bank (SVB), an institution in the region for 40 years, had to be closed after a massive bank run. Due to the sharp rise in interest rates, the institute gambled away with bonds and as a result, lost the confidence of investors and account holders. The outflow of funds, triggered among other things by various large venture capitalists (VCs), then gave the SVB the rest.
Since then it has been under the administration of the banking supervisory authority. And at the weekend there was sometimes naked panic, especially among young start-ups. The SVB had focused on these; It is said that half of all US companies that have received venture capital in recent years have had an account there. It was about a total of 212 billion US dollars in deposit volume. However, only 250,000 US dollars, around 233,000 euros, were secured by deposit protection per account holder. This would have meant a loss of 95 percent of the deposit volume.
Salary payments at risk
Firms wondered how to issue their employees’ weekly paychecks on Monday, with some venture capitalists stepping up the front. But not only start-ups were affected. Well-known tech brands also had accounts with the SVB, some with hundreds of millions of dollars. This affected the multimedia box provider Roku (487 million) and the game provider Roblox (100 million). Crypto firm BlockFi had $227 million in SVB.
It is not known whether Apple also had accounts with Silicon Valley Bank – the company has enormous cash resources of more than $50 billion to be distributed. If there were any, the group would have reported it. However, Apple is part of the Silicon Valley ecosystem and therefore (also) dependent on the innovations of start-ups, which could have problems with the end of the SVB. At the same time, Apple’s share price – as the largest component of the S&P 500 – always depends on the overall situation of the market. This could also be seen in the negative development of the shares of Berkshire Hathaway, Apple’s largest single shareholder. The situation around the SVB has now calmed down a bit. The reason: Because of systemic risk, the US government decided to protect all deposits. At the moment, however, there are still delays in the payments.