YOGYAKARTA - Bad news about the world of the economy coming from Silicon Valley Bank (SVB), a bank headquartered in Santa Clara, California. SVB was forced to collapse or go bankrupt after 48 hours of experiencing a capital crisis on Friday (10/3/2023). So what is the impact of Silicon Valley Bank going bankrupt?
California authorities closed Silicon Valley Bank due to the bankruptcy of the 16th largest bank in the United States (US). The SVB's capital crisis was triggered by the Fed's high interest rate, resulting in deposits withdrawing $42 billion.
Bank's Bank Bank Bank Bank suddenly gave a shock wave around the world. This is because SVB is a bank that provides financing for almost half of the technology and health care companies supported by venture companies in the US.
Bank Silicon Valley bankruptcy not only causes difficulties for business people and MSMEs, but also for their workers. Although not very well known outside Silicon Valley, this bank is one of the largest lenders for various companies in the US, ranging from Pinterest, Roku, Etsy, and Shopify.
Etsy, an online shopping platform, said that recently it experienced a delay in payments to several sellers due to the Bank's Silicon Valley bankruptcy. This impact also befell small business voters and sellers on Etsy.
The fall of SVB not only shakes the stability of startups. The SVB development has also had an impact on other important industries in California, such as quality wine producers. The reason is, SVB has supplied loans that have played a role in the operation of wine plantations since the 1990s.
Jasmine, Hirsch, general manager of Hirsch's Wine Garden in Sonoma County California, expressed great disappointment over SVB's bankruptcy. Hirsch is concerned about the wider effect for small wine sellers looking for a loan for her business.
The impact of SVB's bankruptcy was also felt by Shelf Engine, which has every cent in the bank. Stefan Kalb, CEO of Shelf Engine, is looking for ways to pay employee salaries rather than focusing on his startup business. Stefan said that this condition could potentially force his party to lay off employees until things stabilize again.
Martin Varsavsky, a voter for the company Overture Life, was also affected by SVB's bankruptcy. Martin said if the government allowed people to withdraw half of the money they have at SVB next week, then everything could be fine. But if it remains at 250,000 US dollars, he says many companies will not be able to pay employee salaries.
Meanwhile, Roku, the company that produces digital media devices, estimates that SVB bankruptcy will not have an impact on its operations. Roku still has access to US$1.4 billion in cash and cash equivalents, which are distributed to various major financial institutions.
Senator Alex Padilla tweeted about the widespread impact of SVB bankruptcy if regulators did not act quickly.
"If regulators don't act quickly, Siliconvalley Bank's fall will have far-reaching consequences for our small businesses, startups, and non-profit and wider economy," Senator Alex Padilla tweeted.
Gavin Newson, Governor of California, has spoken with the White House to make efforts to stabilize the situation due to the collapse experienced by Silicon Valley Bank. Gavin Newson hopes to take action as quickly as possible to protect the workforce, the livelihood of the community, and the entire ecosystem of innovation that plays a role in the US economy.
US deposits with less than US$250,000 deposits in Silicon Valley Bank can use insurance provided by Federal Deposit Insurance Corp (FDIC). Meanwhile, the regulator is still looking for buyers for the bank.
The Bank of England (BOE) stated that it would soon place SVB UK in its bankruptcy procedure. It will pay eligible deposits of up to 170,000 pounds for joint accounts as soon as possible. In addition, BOE also revealed that it will sell SVB UK assets to pay creditors.
Such is the review of the impact of Silicon Valley Bank going bankrupt. The fall of SVB has had an impact on many businesses, especially startups and technology companies. Employers ask the government to immediately take wise steps as soon as possible to overcome unstable conditions.
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