No federal bailout for Silicon Valley Bank: US Treasury Secy Janet Yellen

US discusses fund to backstop deposits if more banks fail; UK's high-street banks given 24 hours to rescue SVB UK

Treasury Secretary Janet Yellen said regulators are working through the weekend to resolve the collapse of Silicon Valley Bank with a particular focus on depositors, rather than bailing out investors, though she declined to provide details of possible solutions.

Yellen renewed assurances that the US banking system is safe, well-capitalised and resilient in an interview with CBS’s “Face the Nation” on Sunday.

She said officials are “working to address this situation in a timely way” when asked whether solutions would be presented before markets open in Asia on Monday.
 

“During the financial crisis there were investors and owners of systemic large banks that were bailed out,” she said. “And we’re certainly not looking — and the reforms that have been put in place means that we’re not going to do that again. But we are concerned about depositors and we’re focused on trying to meet their needs.”
 

The Federal Deposit Insurance Corp. and the Federal Reserve are weighing creating a fund that would allow regulators to backstop more deposits at banks that run into trouble following Silicon Valley Bank’s collapse, according to people familiar with the matter. Regulators discussed the new special vehicle in conversations with banking executives, the people said. 
 

“I simply want to say that we’re very aware of the problems that depositors will have,” Yellen said. “Many of them are small businesses that employ people across the country and of course this is a significant concern and working with regulators to try to address these concerns.”
 

US regulators overseeing the breakup of the bank’s parent, SVB Financial Group, are under pressure to sell assets, prompting offers by some investment firms to provide financing to companies with cash trapped at Silicon Valley Bank.
 

While the FDIC insures deposits of up to $250,000, the vast majority of funds held in at SVB far exceeded that. The agency has said it will make 100 per cent of protected deposits available on Monday.
 

Republican presidential candidate Nikki Haley said Saturday that US taxpayers shouldn’t bail out Silicon Valley Bank. “Private investors can purchase the bank and its assets,” Haley, a former South Carolina governor and US ambassador to the United Nations, said in a statement.
 

The Federal Deposit Insurance Corp. and the Federal Reserve are weighing creating a fund that would allow regulators to backstop more deposits at banks that run into trouble following Silicon Valley Bank’s collapse.
 

Regulators discussed the new special vehicle in conversations with banking executives, according to people familiar with the matter. The hope is that setting up such a vehicle would reassure depositors and help contain any panic, said the people. They asked not to be identified because the talks weren’t public. The vehicle is part of the agency’s contingency planning as concern spreads about the health of smaller banks focused on the venture capital and startup communities. 
 

Separately, the FDIC on Saturday queried officials from multiple small- and mid-sized lenders, including First Republic Bank, about their financial situations, according to people with knowledge of the conversations who asked not to be identified because the discussions were private.
 

Britain's biggest high street banks have been given a 24-hour deadline to rescue Silicon Valley Bank UK (SVB UK) from collapse as the Bank of England prepares to place it into an insolvency process, Sky News reported on Sunday.
 

Lenders including Barclays PLC and Lloyds Banking Group are among the parties to have been approached by the board of SVB UK over the weekend to see if an emergency takeover deal can be reached, the report said.