Silicon Valley Bank Crisis 

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Second Biggest Bank Failure in US History

About  Silicon Valley Bank

Commercial bank to fund start-ups in the Silicon Valley Leading banker for some of the most successful startups 16th largest bank in USA

Quick Recap

In 2020 and 2021, SVD witnessed high inflow of deposits. To attract more depositors SVB started paying higher interest rates.

SVB’s Money Deployment Strategy

 * USD 91B in Held to Maturity Instruments * USD 80B in Mortgage backed Securities * USD 26.1B in Available for Sale Investments All investments were in Long term bonds with 10 y maturity

Bonds Lost value as Interest Rates  rose- SVB could hold them until maturity Depositors started to withdraw their money SVB sold its bond holdings at a loss (USD 1.8B).

What went wrong?

Impact on Indian Mutual Funds

US Equity Funds or Hybrid Funds that invest in US equities are under pressure. Short term Indian debt funds may not be significantly affected.

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