The situation that caused Silicon Valley Bank to collapse in the course of 48 hours was uncommon and it’s an example of the type of consequences that can happen after interest rates rise quickly, according to an analyst at RBC Capital Markets.
Last week, SVB became the largest U.S. lender to fail in a decade, after an unsuccessful attempt to raise capital and a mass cash exodus from technology start-ups. Regulators took possession of the bank and it was put into receivership under the Federal Deposit Insurance Corp.Shares of U.S. regional bank stocks are rebounding in trading on Tuesday after coming under pressure during the Monday trading session.
“So I think what you're going to find is that this is temporary, it’s not indefinite in terms of the guarantee on deposits, but you're right, I think it should be reassuring to any depositor over US$250,000 that they will be taken care of in a time of crisis.”While U.S. regional banks SVB and Signature Bank failed days apart, Cassidy reassured that this “was very unusual” and “they were both outliers.