The US government has taken emergency steps in an attempt to prevent more instability among banks after the historic failure of Silicon Valley Bank and assured clients of the failed financial institution that they would be able to recover all of their money quickly.
The announcement came amid fears that the factors that caused the Santa Clara, California-based bank could spread, and only hours before trading began in Asia.
Regulators had worked all weekend to try to come up with a buyer for the bank or broker another intervention, and as another bank, Signature Bank, was shuttered.
The Treasury Department, Federal Reserve and Federal Deposit Insurance Corporation (FDIC) said on Sunday that all Silicon Valley Bank clients will be protected and have access to their funds and announced steps designed to protect the bank’s customers and prevent more bank runs.
Regulators had to rush to close Silicon Valley Bank, a financial institution with more than 200 billion US dollars (£165 billion) in assets, on Friday when it experienced a traditional run on the bank where depositors rushed to withdraw their funds all at once.
It is the second-largest bank failure in US history, behind only the 2008 failure of Washington Mutual.
Some prominent Silicon Valley executives feared that if Washington did not rescue the failed bank, customers would make runs on other financial institutions in the coming days.
Stock prices plunged over the last few days at other banks that cater to technology companies, including First Republic Bank and PacWest Bank.
Among the bank’s customers are a range of companies from California’s wine industry, where many wineries rely on Silicon Valley Bank for loans, and technology start-ups devoted to combating climate change.
Sunrun, which sells and leases solar energy systems, had less than 80 million dollars (£66 million) of cash deposits with Silicon Valley Bank as of Friday and expects to have more information on expected recovery in the coming week, the company said in a statement.
Stitchfix, the popular clothing retail website, disclosed in a recent quarterly report that it had a credit line of up to 100 million dollars (£82.7 million) with Silicon Valley Bank and other lenders.