World Biz
SVB: Money in failed US Bank is safe – US Govt
People and businesses who have money deposited with failed US bank Silicon Valley Bank (SVB) will be able to access all their cash from Monday (13th March) the US government has said.
A statement from the US Treasury, the Federal Reserve and Federal Deposit Insurance Corporation (FDIC) said depositors would be fully protected. The taxpayer will not bear any losses from the move, the statement said. SVB: Silicon Valley Bank was shut down by regulators who seized its assets on Friday.
It was the largest failure of a US bank since the financial crisis in 2008. The move came as the firm, a key tech lender, was scrambling to raise money to plug a loss from the sale of assets affected by higher interest rates.
“The US banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry,” the authorities’ joint statement said.
“Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.” Those actions also apply to Signature Bank of New York, seen as the most vulnerable institution after SVB, which came under regulatory control on Sunday.
As part of their moves to restore confidence, regulators also unveiled a new way to give banks access to emergency funds. The Federal Reserve said it would offer assistance through a new Bank Term Funding Program, making it easier for banks to borrow from it in a crisis.
President Joe Biden said the American people could have “confidence that their bank deposits will be there when they need them”.
SVB was seen as a crucial lender for early-stage businesses in the tech sector. It was the banking partner for nearly half of US venture-backed technology and healthcare companies that listed on stock markets last year.
I’ve been speaking to people with money stuck in SVB over the weekend. One founder told me had been constantly refreshing his online banking page, hoping it might work. Another said he was confident the government would step in, but admitted he might have lost about around 40% of the company’s cash overnight.
This statement, then, has been welcomed by depositors. But there are those that will raise eyebrows at this move.
SVB mainly banked start-ups and venture capitalists in Silicon Valley – the tech elite. And those Silicon Valley elites tend to have more than a streak of libertarianism to their politics: the boilerplate view is that government is slow and too big.
Critics argue that it’s with great irony that it’s the government who has stepped in to save the day. Some will wonder whether influential tech bros have been given preferential treatment: capitalism for when things go well, socialism for when it doesn’t.
It’s why the statement is worded carefully that taxpayers will not be paying for this. Mr Biden will now have to defend the move – and reassure members of his own party that guaranteeing depositors was the only way.
SVB started as a California bank in 1983 and expanded rapidly over the last decade. But it came under pressure as higher interest rates made it harder for start-ups to raise money through private fundraising or share sales. In Silicon Valley, the reverberations from the collapse have been widespread as companies face questions about what it means for their finances.
Paul Ashworth, chief North America economist at Capital Economics, said the US authorities had “acted aggressively to prevent a contagion developing”.
“Rationally, this should be enough to stop any contagion from spreading and taking down more banks, which can happen in the blink of an eye in the digital age. But contagion has always been more about irrational fear, so we would stress that there is no guarantee this will work,” he added.
Meanwhile, an offer has been made for SVB’s UK arm. A consortium of investors led by the Bank of London, a UK clearing bank, has submitted a formal bid to the UK Treasury.
The British government has been working on a plan to support UK tech firms affected by the collapse of SVB.
Russian President Vladimir Putin aims to bolster the count of foreign students in the nation’s universities to at least 500,000 by 2030, as outlined in a decree setting forth national development objectives.
The decree stipulates, “The number of foreign students pursuing higher education in Russian higher learning institutions and scientific organizations should rise to at least 500,000 by 2030.”
As per the Russian Education and Science Ministry, the current tally exceeds 355,000 foreign students studying in Russian universities. Acting Minister Valery Falkov previously highlighted Russia’s position as the world’s sixth-largest host of foreign students.
TASS calculations reveal a notable surge of over 20% in foreign student enrollment across Russian universities over the past five years. Predominantly, foreign applicants admitted to Russian universities hail from China, Vietnam, former Soviet republics, as well as various Asian and Middle Eastern countries.
Prime Minister Sheikh Hasina today (25 April) called for speaking out against all forms of aggression and atrocities, and say ‘no’ to wars.
“We must speak out against all forms of aggression and atrocities, and say ‘no’ to wars,” she said adding that Bangladesh supports the UN Secretary General’s ‘New Agenda for Peace.
The prime minister was addressing the 80th Session of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) held at the ESCAP Hall (2nd floor), United Nations Conference Center (UNCC) here.
She arrived in Bangkok on Wednesday on a six-day official visit to Thailand.
The PM said the pre-condition for sustainable development is lasting peace and security.
“We must settle regional disputes and tension through dialogue. Our mutual respect for national sovereignty and territorial integrity must remain paramount,” she said.
Hasina called upon the Asia-Pacific region, especially ASEAN, to redouble their efforts to end Rohingya crisis as all efforts at regional connectivity, integration, and prosperity will continue to be marked by a missing puzzle without it.
“The origin of their crisis has been in Myanmar, and its solution also lies in Myanmar,” she declared.
“As long as that solution remains out of reach, all our efforts at regional connectivity, integration, and prosperity will continue to be marked by a missing puzzle. Let us redouble our efforts to put that puzzle back in place,” she said.
She said that in August 2017, when thousands of Rohingya men, women, and children from Myanmar fled to Bangladesh, Bangladesh offered them temporary shelter.
“With an ever growing population, this has now become one of the largest humanitarian situations in the world,” she said.
Sheikh Hasina said that In the backdrop of ongoing armed conflicts in Myanmar, the Rohingya repatriation process is also getting delayed.
“This is creating serious security risks within and beyond our territories,” she said.
She called upon the Asia-Pacific region, especially ASEAN, to play a proactive role in resolving the volatile situation in Myanmar.
“We must ensure that the Rohingya can go back home in safety and dignity at the earliest possible,” she said.
The prime minister said that the Asia-Pacific region must stand united against its common enemies of poverty and hunger.
She said Bangladesh has reduced poverty from 41.51 percent to 18.7 percent between 2006 and 2022.
It also reduced extreme poverty from 25.1 to 5.6 percent during the same period.
“We remain confident about eradicating extreme poverty by 2030,” she said.
She mentioned that Bangladesh has made notable progress on food security, with focused interventions on maternal and child nutrition.
“Our current priority is to address inequalities through income distribution, asset ownership, and social protection,” she said.
The prime minister said that Asia-Pacific region must put up a united front in tackling the climate crisis, biodiversity loss, and transboundary pollution.
“We need to push for ambitious climate financing goals beyond 2025 at COP-29. We need to cooperate on cross-border water management and air quality improvement. We must all prepare for growing extreme weather events,” she said.
In this connection, she suggested looking into Bangladesh’s experience in disaster risk reduction.
“We appreciate UN-ESCAP’s support in improving our early warning capabilities,” she added.
Briefly describing various development programmes and achievements of her govebrment, the prime minister said that much of the development gains are affected by climate impacts.
“As a low-lying delta, Bangladesh has no option but to invest heavily in climate resilience,” she said.
She mentioned that Bangladesh is already recognised as a global leader in climate adaptation.
“We are happy to share our traditional and innovative solutions with other vulnerable countries,” she said.
She said that Bangladesh has urged developed and emerging economies in the region to raise their time-bound emission reduction targets.
“For economies in transition, it is important to have a just energy transition.”
In Bangladesh, she said, “we are working on long-term energy security with a sound mix of clean and renewable energy.”
“We shall continue to do our part in pursuing a circular and low-carbon economic growth pathway.”
She underscored the need for increased and easy access to financing and technology from both the public and private sectors.
“I invite UN-ESCAP to help build the capacity of climate-vulnerable countries to mobilise adequate international climate financing.”
PM Hasina said that Bangladesh now provides critical links to the Trans-Asian Highway and Railway networks.
“Our physical and digital infrastructures are being developed to foster regional trade and connectivity.”
She said Bangladesh offers access to the Bay of Bengal for land-locked territories in its neighbourhood.
“We stand ready to work together with all regional partners through mutual understanding and cooperation,” said the prime minister.
The ongoing internet disruption, which began last night due to a cut in the country’s second submarine cable near Singapore, is expected to persist for at least 4-5 days, according to Mirza Kamal Ahmed, managing director (additional charge) of the Bangladesh Submarine Cables PLC.
Ahmed, the official of the state-owned bandwidth provider, informed The Business Standard that the international consortium is in search of a special purpose ship necessary for restoring the undersea cable.
“The exact duration cannot be specified,” he stated, adding, “Based on past instances, it is likely to take a minimum of 4-5 days.”
Internet users are experiencing significant disruption as the accidental cut in Bangladesh’s second submarine cable, South East Asia–Middle East–Western Europe 5 (SEA-ME-WE 5), is blocking Singapore-Kuakata traffic, the source of 1700 GBPS bandwidth.
“We are serving all our users with the help of other sources of bandwidth – the international terrestrial cable (ITC) and the first submarine cable,” informed Nazmul Karim Bhuiyan, secretary general of the ISP Association of Bangladesh.
However, he mentioned that users are encountering some lag on Saturday afternoon.
“As the main broadband usage peaks during the night, we could learn about the full extent of the disruption and any resulting delays tonight,” he added.
The Bangladesh Submarine Cables PLC (BSCPLC) has issued sincere apologies for the temporary inconvenience to its customers.
Efforts are underway to repair the cable through the SEA-ME-WE 5 and restore connectivity promptly, stated the BSCPLC in a statement released today (April 19).
Currently, Bangladesh requires around 5,200 GBPS of internet bandwidth, with half of the demand being met by ITC companies importing bandwidth from India.
For the remaining half of the demand, the country relies on the state-owned Bangladesh Submarine Cable Company.
The first submarine cable SEA-ME-WE 4, located in Cox’s Bazar, is presently supplying approximately 850 GBPS bandwidth.
