BlackRock Inc chief executive officer (CEO) Laurence Fink on Wednesday said the collapse of Silicon Valley Bank (SVB) could just be the start of a "slow-rolling crisis" in the US financial system.

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The world’s largest asset manager has warned that there will be more seizures and shutdowns coming in the US financial system.

This comes after California-based SVB, the 16th largest bank in the United States, was closed last week by the California Department of Financial Protection and Innovation which later appointed the Federal Deposit Insurance Corporation (FDIC) as its receiver.

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Fink described the financial situation as the "price of easy money" and said in an annual letter that he expected more US Federal Reserve interest rate increases.

SVB was deeply entrenched in the tech startup ecosystem and the default bank for many high-flying startups; its abrupt fall marked one of the largest bank failures since the 2008 global financial crisis.

He said that after the regional banking crisis "liquidity mismatches" could follow because low rates have driven some asset owners to raise their exposure to higher-yielding investments that are not easy to sell.

"It's too early to know how widespread the damage is," Fink wrote, adding: "The regulatory response has so far been swift, and decisive actions have helped stave off contagion risks. But markets remain on edge."

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The bank failed after clients — many of the venture capital firms and VC-backed companies that the bank had cultivated over time — began pulling out their deposits, creating a run on the bank.

The FDIC, in a statement, said as of December 31, 2022, the Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits.

At the time of closing, the amount of deposits in excess of the insurance limits was undetermined. The number of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers.

(With inputs from Reuters)

(Edited by : Jomy Jos Pullokaran)

First Published:Mar 15, 2023 11:33 PM IST