How the Silicon Valley Banking Fallout Affects Massachusetts

Silicon Valley Bank in Santa Clara, California. Photo: Justin Sullivan/Getty Images

Massachusetts banks may have attracted new customers The collapse of Silicon Valley Bankbut their investors are also feeling the brunt of the second-largest bank failure in US history.

Why is this important: SVB was a Massachusetts institution, especially after the acquisition of Boston Private Financial Holdings in 2021. The bank held $5.5 billion in deposits in the state last year, becoming the 10th largest depository.

  • The bank’s failure was to have a ripple effect on the stock market, even with the federal government bailout. Now all eyes are on Bank of the First Republicthe sixth-largest bank by deposits in Massachusetts, as stocks fall.

SVB made itself known as a lifeline for start-up startups who have had difficulty obtaining loans elsewhere.

Catch up fast: Federal banking regulators announcement Sunday SVB customers could get all of their money back. The FDIC typically insures up to $250,000, and most companies had significantly more money in their SVB accounts.

  • Closed regulators Signature Banka key institution for the cryptocurrency industry on Sunday.
  • Meanwhile, the Massachusetts congressional delegation is pushing for a FDIC Information Session as they and Governor Maura Healey attempt to plan their next steps.

By the numbers: First Republic Bank is not the only one to see shares fall following the failure of SVB.

  • Bank of America shares have fallen 16% since Wednesday. Massachusetts’ largest depository bank, the BoA had $112 billion in deposits here in 2022.

  • Citizens, Massachusetts’ second-largest custodian, has seen shares of its parent company fall 25% since Wednesday.
  • Santander Bank shares have fallen 13% since Wednesday. Santander is the third largest deposit bank in the state.

Yes, but: Boston-area customers were spared a far worse calamity that would have followed had the federal government not created a backstop to cover uninsured deposits, says David Gulley, professor of macroeconomics at Bentley University. .

Thought bubble, via Neil Irwin of Axios: The US government has signaled that depositors in banks will be cured and widespread bank runs will not be allowed, and there is no reason to think they are bluffing.

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