What Happens When SVB Goes Bankrupt?

 

By : Valeshia Trevana

Ruang Jurnalis, Medan. In this March 2023, Silicon Valley Bank (SVB) is attracting the world’s attention. It because SVB was reported bankrupt. SBV known as ‘the Startup Bank’. SVB was established in 1983, centered in Santa Clara, California. This bank provide services suck as online banking services, payments, deposits, and fraud prevention services.

SVB intends to achieve economic innovation success. SVB desires to become ‘Agent of Change’ where they help company dan partner innovate, evolve, and opening jobs; providing culture where the employee can learn and progress; and together with partners and employee build a fair world.

Unfortunately, the bank from California is reported went through financial crisis and got bankrupt. SVB bankruptcy was the second biggest bankruptcy since the bankrupt of Signature Bank in 2008. The bankrupt of SVB was related with The Fed, United States’s Central Bank raise the interest rates, capital crisis from SVB itself, nad bank runs by customers. Bank runs is large-scale withdrawal of funds by customers.

Bank runs is suspected as the beginning of SVB’s bamkruptcy. Recorded within 10 hours, SVB lost SVB kehilangan dana sebesar US$ 42 miliar atau Rp 633,15 triliun funds. The reason of withdrawal of funds was because technology startup needs fund to their operational needs. Pushed by increasing interest rate of The Fed, so that the impact on SVB's T Bills bonds is negative. This cause SVB sold their asset with loss value to resist their operational needs.

Since the appearance the issue bankruptcy of SVB, bank in United States, Asia, and Europe also decrease caused by the investors worried with general banking conditions. The two biggest bank in United States bankrupt, exposed the fact that many banks were found to be more at risk of sustaining losses on their investments in government bonds due to spikes in interest rates, driving their value down.

Fortunately, SVB's bankruptcy did not have any impact on Indonesia because banks in Indonesia do not have a business relationship, facility line or investment with SVB.