Nigerian startups affected
US regulators were reportedly considering “material action” on Sunday to safeguard Silicon Valley Bank (SVB) deposits and minimise any broader financial ramifications from its abrupt demise, according to sources with knowledge of the matter.
The fall of startup-focused lender SVB Financial Group on Friday was studied by Biden administration officials over the weekend, according to the sources, with a focus on the regional banks and venture capital industry.
The announcement’s specifics, which were due on Sunday, were not immediately accessible. According to one source, the Federal Reserve took measures to keep banks open during the COVID-19 outbreak and might do the same now.
One source stated, “This will be a material action, not just words.”
Prior to SVB becoming the largest bank to fail since the 2008 financial crisis, U.S. Treasury Secretary Janet Yellen stated that she was coordinating with banking regulators to respond.
Yellen stated that she was working to protect depositors but ruled out a rescue as concerns about a wider repercussions across the U.S. regional banking system and beyond grew.
Yellen said on the CBS News Sunday Morning programme, “We want to make sure that the troubles that exist at one bank don’t create contagion to others that are sound.”
Yellen continued, “During the financial crisis, there were investors and owners of systemic large banks that were bailed out … and the reforms that have been put in place means we are not going to do that again.”
The U.S. Federal Reserve announced a series of measures in March 2020 to maintain credit flow by decreasing borrowing prices and extending the periods of its direct loans as the start of the coronavirus pandemic and lockdowns caused financial panic.
By the end of that month, the amount of credit issued by the Fed through the so-called discount window facility had increased to more than $50 billion.
There had been no signs of usage increasing through the middle of last week, before Silicon Valley’s collapse, with Fed data showing weekly outstanding amounts of $4 billion to $5 billion since the year’s beginning.
Several entrepreneurs in Nigeria are also affected by the problem that is plaguing the troubled bank. In particular, persons connected to organisations like YCombinator and Tech Starts operate bank accounts with the bank’s US and UK branches.
The bank had made it easy for local firms of Nigerian origin to receive foreign funding.
Nigerians with stakes in some of these firms claim to have begun getting updates from them about the status of their exposure to SVB.
