BaFin Takes Action against Silicon Valley Bank Germany Branch
Germany’s BaFin forbids Silicon Valley Bank
Regarding Silicon Valley Bank’s demise, the German Federal Financial Supervisory Authority, or BaFin, has stated its view. (SVB). The financial institution must immediately close for business featuring its current clients, per the regulatory statement that BaFin posted on Monday. However, the manager acknowledged that your decision about the suspension and termination of further operations in Germany was not final.
Since its founding in 2018, Silicon Valley Bank’s Germany division has served local clients by offering solutions; however, it does not provide deposit options. According to BaFin, the component isn’t systemically important, and even if it failed, the regional financial system’s financial stability wouldn’t be jeopardised.
The United States Federal Deposit Insurance Corporation (FDIC) released a statement on March 10, 2023, outlining its intentions to protect depositors who had made significant contributions to Silicon Valley Bank, in response to the concerns raised by the organisations. BaFin decided to temporarily halt operations of Silicon Valley Bank Germany Part in order to ensure proper asset management. These precautionary steps will remain in place until the FDIC tends to make decisions regarding Silicon Valley Bank’s business operations that have been transferred under its purview.
Apart from Circle, the prohibition has also had an impact on a few notable depositors. These included, among others, Roblox ($150 million), BlockFi ($227 million), which had just filed for bankruptcy, and Roku ($487 million). That being said, a number of cryptocurrency companies have said that they will not be holding any assets linked to the now-defunct Silicon Valley Bank, including Binance, Tether, Paxos, and Gemini.
In addition, the collapse of SVB caused fear in the traditional currency markets, particularly in lending stocks. Monday morning saw an 11% collapse in Credit Suisse and a historic low. Conversely, the Dow Jones benchmark tracking bank directories dropped to the lowest levels since October.