Bank stocks brace for impact on a jittery Monday: Here’s the latest fallout from the collapse of SVB

The fallout from the collapse of Silicon Valley Bank last week has continued throughout the weekend, with multiple government agencies stepping in to try to cushion the blow. SVB’s downfall represents the largest bank failure since the 2008 financial crisis. Here’s the latest as of Monday morning.

The FDIC will protect insured depositors at SVB. The Federal Deposit Insurance Corporation on Sunday announced it would protect the deposits of insured SVB account holders. Normally the FDIC only insures up to $250,000 per individual, but this can be overridden provided the Treasure Secretary and enough FDIC and Federal Reserve boardmembers approve, reports Forbes.
What has the FDIC said, specifically? This is what the FDIC will now try to do, stating on its website: “All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.”
Signature Bank collapsed, too. SVB wasn’t the only bank collapse over the past week. On Sunday, the beleaguered Signature Bank collapsed as well, with New York State regulators stepping in to close it down, reports Reuters. The bank was a primary lender to those in the crypto industry and it represents the third-largest failure in U.S. banking history.
HSBC purchased the UK branch of Silicon Valley Bank. On Monday morning, the Bank of England and the UK Treasury approved the purchase of the UK brand of SVB by HSBC UK for just £1 (about $1.21). As CNBC reports, this maneuver should provide some calm and assurances to UK SVB depositors. Announcing the purchase, HSBC Group CEO Noel Quinn said, “SVB U.K. customers can continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety and security of HSBC.”
Banking industry braces for impact: Shares of some financial institutions—particularly regional banks—plummeted ahead of the market’s opening bell on Monday morning. Over the prior week and in pre-market trading today, stocks for many banks sunk as fears grew that SVB’s collapse could spread like a contagion throughout the sector. Banks whose stocks were down the worst, as of the time of this writing, include First Republic Bank (FRC), which was down 60%; Western Alliance Bancorporation (WAL), which was down 47%; and PacWest Bancorp (PACW), which was down 42%.
Major bank stocks fall (update). Shares of major financial institutions were down as the market opened on Monday morning, some more than others. Bank of America (BAC) was down more than 5%, as was Wells Fargo (WFC) and Citigroup (C). JPMorgan Chase (JPM) managed to fare better, declining about 1% in early-morning trading.
Cryptocurrencies surge. Despite being hit hard on Friday, cryptocurrencies are currently surging as of the time of this writing on Monday morning. Bitcoin is up nearly 8% to over $22,200, Ethereum is up over 7%, Cardano is up over 8%, and Dogecoin is up nearly 4%. The rise in crypto coincides with the FDIC confirming it would step in to limit the fallout of SVB.