Silicon Valley Bank Was Forced To Sell Off Its Securities Sharply
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SVB is a bank that mainly supports start-ups, as a large bank it seems solid and resistant to major crises. But as they show, even the big banks are vulnerable.
In this article:
- Silicon Valley Bank
- UK economy
- Gender-segregated is still common
Silicon Valley Bank
For the Silicon Valley region, trouble comes at a particularly difficult time.
Silicon Valley Bank has long been regarded as a driving force behind tech start-ups, providing traditional banking services while financing projects and companies deemed too risky for traditional lenders.
But the 40-year-old company's close ties to technology make it particularly vulnerable to the industry's ups and downs cycles, and on Thursday those risks became clear.
SVB was forced to sell off its securities sharply, offloading its $21 billion holdings at a loss of $1.8 billion while raising $500 million from venture capital firm General Atlantic. As a large regulated bank, the SVB was seen as a stabilizing force. But her recent financial maneuvering is causing concern among the firm's clients.
According to SVB's mid-quarter update, one of the bank's main concerns is the amount of money its customers are spending. Total client funds declined over the past five quarters as cash burn continued at a rapid pace despite a slowdown in venture investments.
At present, the SVB can only hope to remain a trusted source of funding for companies that want to eventually hold a significant portion of that money.
Silicon Valley Bank's struggles spell further trouble for beleaguered tech startup market @rogoswami @levynews https://t.co/y9yGQn5tVt
— Ted Kemp (@TedKempCNBC) March 10, 2023
UK economy
Children returning to school after a disease-ravaged December provided an unexpected, one-off boost to the UK economy in January.
The Office for National Statistics (ONS) said the UK economy grew by 0.3% month-on-month after falling 0.5% in December - a reading that is likely to further allay fears of a recession, at least in the short term.
The entertainment sector - backed by the men's Premier League, which returned to action after the 2022 World Cup - has been another stimulus to the economy.
As a sign of deeper problems for the economy, production and construction were contracted.
British economic output rose by a better-than-expected 0.3% month-on-month in January. More here: https://t.co/eVei3cFlES
— Reuters Business (@ReutersBiz) March 10, 2023
Gender-segregated is still common
Despite significant progress in recent decades, labor markets around the world continue to be gender-segregated. Women's participation in the labor force remains lower than that of men, the gender pay gap is wide and women are overrepresented in the informal sector and among the poor. In many countries, legal restrictions persist that prevent women from developing their full economic potential.
Better opportunities for women can also contribute to broader economic development in developing economies, for example through higher enrollment of girls in schools.
#EmbraceEquity: "An economy can only reach its full potential when it taps into the talents of men AND women. The IMF’s gender strategy aims to bring women front and center in economic policy discussions.” —@KGeorgieva
— IMF (@IMFNews) March 9, 2023
More on #IMFGender: https://t.co/EpHDwGYaTB pic.twitter.com/ry6ou7FEa0
