The exposure to the recently collapsed Silicon Valley bank could be 10-20 basis points for TCS, Infosys and smaller rival LTIMindtree.
SVB Financial Group has previously explored bankruptcy protection as an opportunity to sell assets that include investment banking and venture capital businesses.
The Silicon Valley bank that collapsed last week is now officially declared bankrupt, even as the lender’s shares plunged as much as 60 percent overnight. Its parent SVB Financial Group has explored bankruptcy protection as an opportunity to sell assets that include investment banking and venture capital businesses.
SVB Financial Group, which was seized by the US last week, is filing for Chapter 11 bankruptcy protection. SVB Financial Group is no longer affiliated with the Silicon Valley bank after it was seized by the Federal Deposit Insurance Corporation.
The bank’s successor, Silicon Valley Bridge Bank, operates under FDIC jurisdiction and is not subject to Chapter 11 filings. SVB Financial Group estimates it has about $2.2 billion in liquidity.
The collapse of Silicon Valley Bank, also known as SVB, is being called the biggest bank failure since the 2008 Washington Mutual crisis or the global financial crisis. It was the 16th largest lender in the US and was the primary bank for several startups around the world.
The bank failed after clients – many of whom were venture capital firms and VC-backed companies the bank over time – started working for the bank and withdrawing their deposits. SVB’s decline has led investors to speculate that the Fed will hold back on raising interest rates by a super-sized 50 basis points this month.
On March 8, SVB announced that it had sold $21 billion worth of securities in its portfolio at a loss of $1.8 billion. The group sold $2.25 billion in stocks to shore up its finances, which included U.S. Treasuries and mortgage-backed securities.
Crypto-based lender Silvergate is announcing plans to wind down operations and ease liquidation amid heavy losses following the collapse of cryptocurrency exchange FTX, which led to a surge in exits from SVB.
SVB had a negative cash balance of $958 million, according to a March 9 regulatory filing. Shares in SVB fell 41 percent, its biggest drop since 1998. “Although the bank was in good financial condition until March 9, investors and depositors withdrew $42 billion in deposits, triggering the bank’s collapse,” the statement said.
Later, on March 10, the US Federal Deposit Insurance Corporation (FDIC) announced that SVB “has been closed by the California Department of Conservation and Innovation, which today appointed the FDIC as receiver.”
JPMorgan analysts said on Friday that Indian IT firms Tata Consultancy Services and Infosys are the most affected regional banks in the US financial crisis.
Regional banks in the United States account for 2-3 percent of their revenues, JP Morgan said in a note that the impact of the recently collapsed Silicon Valley bank could be 10-20 basis points for TCS, Infosys and smaller rival LTIMindtree. , the Tata Group company is the leader.
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