The collapse of Silicon Valley Bank, which is the biggest retail banking failure since the global financial crisis, has triggered a wave of implications the reach of which is yet to be ascertained. An unexpected victim of the US bank's abrupt demise is a 116-year-old co-operative bank in Mumbai, over 13,000 km away.
Mumbai's SVC Co-operative Bank issued a clarification on Twitter distancing itself from the key lender to US startups. "SVC bank is completely unrelated to Silicon Valley Bank (SVB) that was based in California. We request our members, customers and other stakeholders not to pay attention to baseless rumours and mischief-mongering by unscrupulous elements insinuating similarities in brand names."
The bank added that it reserves the right to take due legal action on rumour mongers for tarnishing its brand image.
Important announcement#HumSeHaiPossible #SVCBank #Banking #SVC #Importantannouncement pic.twitter.com/p05lHBJm9w
— SVC Bank (@SVC_Bank) March 11, 2023
Responding to the tweet, ZyppElectric CEO Akash Gupta wrote, "The next might be SLB (Sanjay Leela Bhansali) putting out a statement on the matter. India is amazing." Another user wrote, "The state of our fellow Indians and WhatsApp University. Great that SVC actually put out this important clarification, kudos to you!"
Needless to say, SVC, founded in 1906, has no apparent relation to the US based Silicon Valley Bank which was shuttered on Friday by California banking regulators. The move came after a dramatic 48 hours that saw the high-tech lender's share price plummet amid a run-on deposit by concerned customers.
The collapse of the SVB, which specialises in venture-capital financing, has sent shockwaves in global markets. Nearly $175 billion of the bank's customer deposits are now under the control of the Federal Deposit Insurance Corporation, or FDIC, which has assured the depositors full access to their insured deposits after all the branches of the bank open on Monday morning.
SVB's problems were sparked by customer withdrawals that led the company to liquidate securities positions whose values had plummeted due to the Federal Reserve's interest rate hikes. The quick jump in interest rates meant that securities they had bought were selling for significantly less.