With reports of significant exposure of Hong Kong tech companies to the failed US bank Silicon Valley Bank, the monetary authority of Hong Kong has stepped in with an assurance about the territory's banking system.
The Hong Kong Monetary Authority (HKMA) issued a statement assuring depositors that Hong Kong's banking system is well protected from the stunning collapse of SVB, the 16th largest bank in the US.
According to the latest reports Hong Kong-listed technology and biotech companies had deposited nearly $200 million in the California-based, tech and startup-focused bank that suffered a bank run last week and collapsed.
Dozen Hong Kong-Listed Firms Affected
The HKMA said about a dozen Hong Kong-listed firms had deposits totalling $194.03 million at SVB, and that the amounts invested ranged from $400,000 to $175.5 million, according to the South China Morning Post.
Silicon Valley Bank was shut down by California regulators on Friday and US Federal Deposit Insurance Corporation (FDIC) took over the failed bank, marking the biggest bank failure since 2008 in the United States.
The US Federal Deposit Insurance Corporation (FDIC) said last week it was attempting to find another bank that would merge with SVB to manage the crisis. According to FDIC, the crisis can be stemmed if it can seal a merger deal by Monday. If such a deal emerges, the unsecured deposits can be safeguarded. FDIC is an independent federal agency that insurers bank deposits and oversees financial institutions.
On Sunday, the Federal Reserve said that all depositors at Silicon Valley Bank will get their money back. Treasury Secretary Janet Yellen announced on Sunday morning that there will be no government bailout, and the Fed announced that no taxpayer funds would be used. However, Yellen assured that all those with money in the collapsed SVB will get their money back.
BeiGene Worst Hit With $175 Million Uninsured Deposits at SVB
Beijing-headquartered biotech firm BeiGene, which had about $175 million in deposits at SVB was the worst hit among the Hong Kong-listed companies. To make matters worse, BeiGene's deposits were uninsured and comprised about 13% percent of its cash holdings. "The company does not expect the recent developments with SVB to significantly impact its operations," BeiGene said, according to the SCMP.
Meanwhile, another US bank too bit the dust in the aftermath of the collapse of SVB and the adverse pressure it created on the banking sector. Signature Bank had 38 private client offices operated located in New York, Connecticut, California, and North Carolina.
