Market News ‑ Silicon Valley Bank Closure15 March 2023
In the past week, a handful of regional US banks have closed - Silicon Valley Bank (SVB), Signature Bank, and Silvergate Capital. SVB, a specialised bank that primarily serves tech companies, was most notable.
Many SVB depositors were concerned they wouldn’t be able to withdraw their funds. This caused a ‘bank-run’ where many depositors tried to withdraw their cash all at once.
The US Treasury and Federal Reserve have stepped in and announced on 12 March 2023 that all depositors would be repaid their savings in full. This is a significant step, improving the outlook for other US regional banks as the Federal Reserve has effectively underwritten the risk to depositors.
Whilst still too early to tell, some implications for financial markets may include the future path of official interest rates in the US. Funds SA, as investment manager of Super SA’s investment options, together with their appointed fund managers and specialist advisers, continually monitor financial markets closely and will position investment options appropriately.
It is expected that there will be media speculation regarding the situation, and market volatility in the short-term. Members should continue to focus on their own investment goals and look past any short-term volatility.
We will provide further updates via this page as required.