Financial turmoil continues in global markets
Investigations into the collapse of Silicon Valley Bank and its UK subsidiary have been launched in the US and UK. As financial markets struggle to recover from the turmoil of recent days, investigations have been launched into the bankruptcy of a California lender.
An investigation into the collapse of the Silicon Valley Bank (SVB) and its UK subsidiary has been announced in the UK and America, although financial markets have gradually calmed down, while banking stocks have recovered from Monday's turmoil, writes The Guardian.
In the US, Justice Department prosecutors, as well as the stock market regulator, the Securities and Exchange Commission (SEC), are conducting separate investigations into the collapse of California lender SVB, which was handed over to the government after its deposits were reviewed.
Two investigations, o first reported by The Wall Street Journal are only preliminary and therefore may not result in any charges or allegations of misconduct. Such investigations are not uncommon when companies suddenly suffer large losses.
Authorities are also investigating a sale of shares by executives from SVB Financial Group's parent company days before the bank's bankruptcy, the report said.
A few hours earlier, a group of SVB shareholders sued SVB Financial Group's parent company and two of its senior executives in what many expect will be the first of several possible lawsuits over the bank's collapse.
The proposed class-action lawsuit accuses SVB Financial Group chief executive Greg Becker and chief financial officer Daniel Beck of covering up that raising interest rates would make the SVB division «particularly susceptible» to to bankruptcy.
As The Guardian recalls, on Sunday evening, US regulators took emergency action to prevent the spread of the consequences of the SVB collapse, transferring ownership of the bank's assets and liabilities to the Federal Deposit Insurance Corporation (FDIC). The regulators have said they will ensure that all customers can access their money on Monday morning.
In the UK, politicians from the powerful Parliamentary Treasury Selection Committee have written to the Governor of the Bank of England and the Chancellor of the Exchequer for Economic Affairs, asking them about the collapse of the UK arm of the SVB and what it means for bank regulation in the wake of the financial crisis.
< p>U.S. bank stocks bounced back on Tuesday, reversing some of Monday's heavy losses as markets were gripped by fears of an escalating banking crisis, according to The Guardian.
First Republic, a regional bank in San Francisco, jumped more than 50%. on Tuesday, after falling 62% a day earlier. Shares of Western Alliance, headquartered in Phoenix, Arizona, jumped 40% on Tuesday. The S&P 500 rose almost 2% in New York at noon.
The rise occurred despite Moody's rating agency downgrading its outlook on the US banking system to negative, citing to a “rapidly deteriorating operating environment”.