Silicon Valley: Silicon Valley Bank (SVB), a US bank with a focus on startups and the tech industry, was shut down by regulators on Friday as customers tried to withdraw their money from the institution due to concerns about its financial stability. 

California regulators have reportedly taken control of the lender's deposits and transferred the assets to a newly established entity, the Deposit Insurance Bank of Santa Clara, according to a statement from the Federal Deposit Insurance Corporation (FDIC).

At the end of last year, SVB, an important bank for venture-backed companies, was ranked as the 16th largest US lender with nearly $209 billion in total assets and $175.4 billion in deposits.

Also Read: In Germany a suspect is held in custody after an extended hostage situation

Market analysts claim the lender has been under pressure in the recent past due to concerns about the recent recession, rising interest rates and a slowdown in the market for initial public offerings.

Due to these factors, businesses were forced to withdraw funds from their deposits with SVB and other lenders as it was difficult for them to raise additional funds.

The bank announced earlier this week that it planned to sell $2.25 billion of new shares, despite a loss of $1.8 billion on asset sales, in an effort to raise capital to balance deposit outflows.

Also Read:  A decentralised, text-based social networking platform is being developed by Meta

However, the announcement led to an increase in withdrawals. As a result the bank's stock plunged 60% on Thursday and another 60% in premarket trading on Friday.

Market experts claim that because depositors were withdrawing money so quickly, bank bankruptcy became inevitable and the FDIC was forced to halt sales.

According to the FDIC, SVB offices will reopen on Monday, allowing insured depositors to access their funds. However, regulators claim that 89% of the bank's deposits were not covered by insurance, meaning hundreds of millions of dollars may now be stranded.

According to Reuters sources, in order to protect unsecured deposits, the agency is currently considering a merger with another bank.

Social media has been used extensively to discuss the demise of the tech-focused lender and its potential implications. Several people commented on a tweet that suggested SVB should "become a digital bank" after the suggestion.

Twitter owner Elon Musk expressed his openness to the idea in one of them.

Since the collapse of Washington Mutual in 2008, which served as a catalyst for the global financial crisis, the failure of the SVB is regarded as the largest banking system collapse in the US.

European and Asian stock markets have already been rocked by the collapse of SVB, which saw US bank shares being sold by investors on Friday on liquidity concerns.

Also Read:  A US congressman believes that Moscow should end up losing, but not "too badly"

Since the collapse of Washington Mutual in 2008, which served as a catalyst for the global financial crisis, the failure of the SVB is regarded as the largest banking system collapse in the US.

European and Asian stock markets have already been rocked by the collapse of SVB, which on Friday saw US bank shares being sold by investors on liquidity concerns.