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Silicon Valley Bank Crisis: Elon Musk Replies As Razer CEO Suggests 'Twitter Should Buy SVB And Become Digital Bank'

Zee News 11-03-2023 Varun Yadav

© Provided by Zee News

New Delhi: The Silicon Valley Bank was shutdown by the US authorities and billions of dollars have been stranded. It has become the largest bank failure since Financial crisis of 2008. The effects have started to ripple to the global market with major world’s indices see drastic pull out of money by the investors globally.

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Razer CEO Min-Liang Tan Proposed Twitter to buy the silicon valley bank in short SVB and becomes a digital bank. In replying of that tweet, Elon Musk said he is open to the idea.

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Silicon Valley Crisis Causes

As Fed has been hiking the interest rate to rein inflation in the United States, it has decreased the morale and the risk appetite of investors and they started pulling out money to meet their liquidity needs. This caused the Silicon Valley bank to look out for ways to meet the sudden liquidity demands from the clients.

Hence, the bank sold its bond portfolio mostly of US Treasuries in loss. Hereafter, it announced it would sell $2.25 billion in common equity and preferred convertible stock to fill its funding gap. It triggered investors to sell out shares and led to the drastic fall of prices. They were collapsed losing over 60-70% value in the session.

Finally, the Federal Deposit Insurance Corporation (FDIC) announced that SVB was shutdown and placed under its receivership. The FDIC added that it would seek to sell SVB's assets and that future dividend payments may be made to uninsured depositors.

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