Will the world see another day like 2008 when a big bank in Silicon Valley, America went bankrupt?

Silicon Valley Bank:  A large bank in America, Silicon Valley Bank, has gone bankrupt. Considering the bank's financial situation, it has been closed down. After the news of this came out, not only the American market, but also the markets around the world have been in turmoil. The fear of a global recession has increased. People are reminded of the year 2008.

What is the Silicon Valley Bank case?

The major bank of America, Silicon Valley Bank, has gone bankrupt. The regulators of Silicon Valley Bank (SVB) have shut it down. After the bank went bankrupt, its assets were seized. This information was provided by the Federal Deposit Insurance Corporation (FDIC). Once again, America is facing a banking crisis. The United States is once again facing a serious financial crisis with the bankruptcy of a bank.

The bank of America went bankrupt, its impact was seen around the world.

The news of the closure of this bank in America could have an impact on countries around the world. After this news came out, there was a sudden drop of 8.1% in the benchmark stock index of the banking sector. This drop is the biggest drop in a single day in the past three years. The Indian stock market was also affected by this. The Indian stock market closed with a red mark on Friday. The closure of this bank in America has created chaos everywhere. The news of the bank's bankruptcy could create negative sentiment in global markets for the next few days. The Indian market is also not immune to this. Meanwhile, the threat of another recession is looming around the world.

Why did the bank close?

Looking at the financial condition of the bank, the decision to close it was taken. The Department of Financial Protection and Innovation in California directed the bank to close. The responsibility of safeguarding the deposits of the customers of Silicon Valley Bank was given to the FDIC. You will be surprised to know that Silicon Valley Bank is the 16th largest bank in the United States with assets of more than 210 billion dollars. Its branches are spread across many cities in America. You might be wondering what happened to such a big bank that it had to be closed. Actually, the bank's situation deteriorated due to an increase in interest rates. Silicon Valley Bank provides financial support to tech companies and new ventures. The bank has about 44% of its business with tech and healthcare companies. The continuous increase in interest rates by the Federal Reserve in the US has had a negative impact on these sectors. Even investors are now less attracted to these sectors, which has also had a negative impact on the business of SVB bank. Companies that had taken loans from the bank did not repay them, which has affected the bank's financial health.

why People remembering 2008

After the closure of Silicon Valley Bank, people started to remember 2008.

As a result of the banking firm Lehman Brothers, the United States experienced the largest banking crisis in 2008. The recession affected not only America, but also the entire world. In fact, Lehman Brothers and other American banks had distributed loans generously during that time. From 2001 to 2006, American real estate companies were given hefty loans without much thought on how they would repay them. At that time, the American real estate market was booming, and banks were making profits by giving out loans to companies, often more than the value of their assets. However, when the sector experienced a downturn, the banks faced difficulties. Companies started to go bankrupt, and the banks' debts began to pile up. In 2008, Lehman Brothers declared bankruptcy, and a recession started globally, including in America.