In a surprising turn of events, traditional US bank Silvergate collapsed as its shares dropped in the market. This shocking development has sent ripples throughout the financial world and raised concerns about the stability of the banking industry.
The shares of Silvergate began to decline on Thursday, causing concern among investors and analysts. By midday, the stock had dropped by over 60%, siphoning off $80 billion in value. As a result, many investors have now begun to sell off their shares.
The collapse of Silvergate has sent shockwaves through the financial industry, with many experts predicting a domino effect that could also lead to the collapse of other traditional banks. This has left many investors concerned about the stability of the banking industry, with some calling for increased regulation and vigilance.
What is the Response of the Experts?
Response to the news has been mixed, with some investors expressing anger and frustration at the bank’s management, while others are more sympathetic to the bank’s plight. US Senator Elizabeth Warren considered Silvergate bank’s failure depressing, but destined. Many customers have also expressed concern about the safety of their deposits.
What will be the Next Move for Silvergate Bank?
This would be a significant blow to the banking industry and could have far-reaching consequences for the economy as a whole. However, as of now, the bank aims to promise full repayment of all deposits for customers.
Apart from that, Silvergate unveiled the sale of $21 billion worth of its securities holdings to compensate for a $1.8 billion loss to fortify its balance sheet, planned to collect additional capital. The collapse of Silvergate serves as a reminder of the vulnerability of the banking industry and the need for proper supervision and regulations.