Silicon Valley Bank contagion begins spreading; high-tech world faces stress test

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By Our Special Correspondent

New Delhi, March 12: First signs of the collapse of the much celebrated Silicon Valley Bank collapse spiraling out of control emerged on Saturday as Israeli Prime Minister Benjamin Netanyahu underlined that he was monitoring the consequences and impacts on the high-tech world. The second biggest banking collapse in the US history has already bound the American politicians in knots, as fears of the US Federal Reserve to stay on aggressive rate hike path are now threatening to put the banking institutions under the survivor test.

“I am closely monitoring the collapse of the American investment bank, Silicon Valley Bank, which has led to a major crisis in the high-tech world. If necessary, out of responsibility to Israeli high-tech companies and employees, we will take steps to assist the Israeli companies, whose center of activity is in Israel, to weather the cash-flow crisis that has been created for them due to the turmoil,” tweeted Netanyahu.

Israeli economy is seen in its golden stage of high growth led by the high-tech industries. Israel has also emerged as the high-tech powerhouse, led by the startups, who have in a short span of time grown up in big sizes, with easy availability of funds.

“From Rome I have held talks with senior high-tech figures in Israel. Upon my return to Israel I will discuss the scope of the crisis with the Finance and Economy ministers and the Governor of the Bank of Israel,” added Netanyahu.

California-based US politician Ro Khanna is seen at the forefront to save depositors money in the failed bank, which has been taken over by the US Federal Reserve. “The Treasury Department and FDIC must communicate loudly and clearly that depositors will be protected. The investors and executives of SBV should bear risk and lose. But this should not mean that workers go without paychecks on Monday or small businesses collapse,” Khanna has said on the episode.

Aneta Markowska at Jeffries has warned that more pain is in store as a consequence of the US Federal Reserve’s aggressive rate hikes, stressing that the economy has still not yet been hit. With Netanyahu baring the concerns at the highest level of the pain spiraling out of the Silicon Valley in California to Israel, the warning bell is ringing of a global crisis in the making.