US regulators have shut down SVB, the country's 16th largest bank, in the biggest collapse of a financial institution since the 2008 financial crisis
Silicon Valley Bank had acted as a major financial conduit for venture capital-backed companies, which have been hit hard in the past 18 months as the US Federal Reserve has raised interest rates and made riskier tech assets less attractive to investors.
The bank was heavily exposed to the tech industry but experts say there is little chance of knock-on effects in the banking sector as there was in the months leading up to the recession more than a decade ago.In 2007, the biggest financial crisis since the Great Depression rippled across the world after mortgage-backed securities tied to ill-advised housing loans rippled from the US to Asia and Europe.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said there was a"state of mild panic" surrounding shares in the financial sector because of the Silicon Valley Bank news. She said interest rate worries had also rattled investors but that the news from the US had them particularly"spooked".Markets were also down in the US where the S&P 500 had given back 0.7% of its value while the Dow Jones was trading down 0.4% shortly after trading ended in London.On currency markets the pound gained 1.1% against the dollar, trading at 1.205 by the close of play on stock markets.
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