How the Silicon Valley Banking fallout impacts Massachusetts
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Silicon Valley Bank in Santa Clara, California. Photo: Justin Sullivan/Getty Images
Massachusetts banks may have gotten some new customers out of Silicon Valley Bank's collapse, but their investors are also feeling the brunt of the second-largest bank failure in U.S. history.
Why it matters: SVB was an institution in Massachusetts, especially after acquiring Boston Private Financial Holdings in 2021. The bank held $5.5 billion in deposits in the state last year, becoming the 10th largest deposit-holder.
- The bank’s failure was bound to have a ripple effect across the stock market, even with the federal government’s bailout. Now all eyes are on First Republic Bank, the sixth-largest bank by deposits in Massachusetts, as shares plummet.
SVB became known as a lifeline for early-stage startups who struggled to get loans elsewhere.
Catch up fast: Federal banking regulators announced Sunday SVB’s clients would be able to recover all of their money. The FDIC typically insures up to $250,000, and most companies had far more money in their SVB accounts.
- Regulators shut down Signature Bank, a key institution for the cryptocurrency industry, on Sunday.
- Meanwhile, Massachusetts’ congressional delegation is pushing for an FDIC briefing as they and Gov. Maura Healey try to plan their next steps.
By the numbers: First Republic Bank isn’t the only one seeing shares fall in the wake of SVB’s failure.
- Bank of America shares have dropped 16% since Wednesday. The largest bank by deposits in Massachusetts, BoA had $112 billion in deposits here in 2022.
- Citizens, the second-largest deposit-holder in Massachusetts, has seen shares in its parent company sink 25% since Wednesday.
- Santander Bank shares have fallen 13% since Wednesday. Santander is the third-largest bank by deposits in the state.
Yes, but: Boston-area customers were spared from a far worse calamity that would have ensued had the feds not created a backstop to cover uninsured deposits, says David Gulley, a macroeconomics professor at Bentley University.
Thought bubble, via Axios’ Neil Irwin: The U.S. government has signaled that depositors in banks will be made whole and that widespread bank runs will not be allowed to happen, and there is no reason to think they are bluffing.