Silicon Valley Bank collapse: What you need to know

(Reuters) – Shockwaves from the collapse of Silicon Valley Bank pounded global bank stocks on Tuesday as assurances from President Joe Biden and other policymakers failed to calm market worries about contagion and prompted a rethink on the interest rate outlook.

Biden said his administration’s actions meant Americans could have confidence in their banking system, and also promised stiffer regulation.

COLLAPSE

*Startup-focused lender SVB Financial Group on March 10 became the largest bank to fail since the 2008 financial crisis, in a collapse that roiled global markets.

*Banking regulators said on Sunday that SVB depositors would have access to their funds on Monday, putting to rest fears that startups would struggle to pay their employees this week.

*President Biden on Monday addressed the banking crisis, hinting at new regulation of banks, however he faces a divided Congress unlikely to approve tougher new rules.

*State regulators closed New York-based Signature Bank (NASDAQ:) on Sunday, the third-largest failure in U.S. banking history.

*Customers who lined up outside SVB’s Santa Clara headquarters on Monday were told by a Federal Deposit Insurance Corporation employee, “You will be able to transact business as usual.”

*In Britain, HSBC bought the UK arm of Silicon Valley Bank for a symbolic one pound on Monday, rescuing a key lender for technology startups in England.

GLOBAL FALLOUT

*The rout in global banking stocks continued in Asia on Tuesday, following a brutal selloff on Wall Street on Monday in which shares of JPMorgan Chase & Co (NYSE:), Citigroup (NYSE:) and Wells Fargo (NYSE:) all lost ground.

*Japan’s financial stocks led losses in Asian trade, while in Hong Kong shares of HSBC fell to their lowest since Jan. 12, tracking declines in the London-listed counter.

*The dollar has weakened as markets bet the Fed will slow, if not halt, its raising of interest rates to curb inflation after the sudden collapse of Silicon Valley Bank.

* Canada’s banking regulator said it was increasing its monitoring of domestic banks’ financial health following SVB’s collapse, The Globe and Mail reported on Monday.

QUOTE

“Americans can have confidence that the banking system is safe…Your deposits will be there when you need them.” – U.S. President Joe Biden.

“I recognize the past few days have been an extremely challenging time for our clients and our employees, and we are grateful for the support of the amazing community we serve.” – Tim Mayopoulos, FDIC-appointed CEO of SVB.