JAKARTA – The United States’ financial sector was found in distress after the official declaration of bankruptcy of Silicon Valley Bank (SVB) and Signature Bank in New York. Last week, on March 10 and 12, the financial authorities in the States claimed that both banks failed to meet the adequate liquidity ratio.

The termination of SVB and Signature Bank reminded the public of the winding down of Lehman Brothers during the global monetary crisis in 2008. In said year, Lehman Brothers ended its time as the oldest financial institution in the US of 100 years.

SVB is the second bank dissolved by the US financial authorities within the past 15 years since 2008. SVB is declared bankrupt 48 hours after it publicly announced of being in dire need of USD 2.25 trillion to keep its business going last Wednesday (8/3).

This bank, widely known as a bank that provides funding for start-ups in Silicon Valley, is now under the supervision of Federal Deposit Insurance Corporation (FDIC) in order to minimise the domino effect it may cause to other sectors in the US. Then, two days after SVB was shut down, the US financial authority made the same decision for Signature Bank in New York.

The Ministry of Finance of US and the Fed, the central bank of US, then announced an emergency program to secure the deposits made in those banks by using the Fed’s emergency loan regulation.

Signature Bank, a commercial bank in the crypto-assets, was first established in 2001. After the 2008 global crisis, the bank had been reportedly given efficient services with swift and uncomplicated bureaucracy.

The bank then branched out to the real estate sector, one of its most prominent business lines aside from crypto-assets. Last Friday (10/3), Signature Bank’s shares were reportedly seen freefalling 23% to its lowest position since being listed back in 2004. Two days later, the bank was declared bankrupt. (LK/ZH)