NZ not immune from ripples of US bank's collapse

Sun, Mar 12

New Zealand will not be immune from the fallout caused by the collapse of Silicon Valley Bank (SVB), one of the biggest in the United States.

SVB, which specialised in serving tech companies and startups, has had its assets seized by the US government after a bank run caused it to fail.

Tech company CEOs and founders were seen lining up outside SVB branches, desperate to salvage as much of their assets as possible.

"We wired out the money yesterday, but Silicon Valley Bank did not honour our wire, so we were not able to move any of our cash out of our bank account," said Stefan Kalb, chief executive of Shelf Engine.

SVB was the 16th largest bank in the USA, and the second biggest to fail after Washington Mutual's downfall at the height of the 2008 financial crisis.

Some have argued the rafts of redundancies in US tech companies could benefit New Zealand's domestic industry. Whether this is the case or not, it's hard to dispute that the bank's collapse will reverberate through global markets and impact New Zealand.

"Realistically, our stock market is not going to be flash on Monday and there is probably a period of more subdued tracing while people get their head around what all this means, the risk, I think, is more for the tech sector across the world," economist Brad Olsen said.

Many tech bosses around the world are now having to work out how they can access their money — and may need to make tough decisions about whether they can pay their staff, or even keep their business running.

"Unless someone comes in and is able to support Silicon Valley Bank through an acquisition through other means, I mean, a lot of us are going to be in a very painful situation very quickly," Kalb said.

"And so the big ask is for the federal government to come in and step in."


More Stories