We look at how Australia was effected and is reacting to the collapse of Silicon Valley Bank, a week on from the news breaking.
Last week, Silicon Valley Bank collapsed. The bank collapse was the largest of any bank since the 2007–2008 financial crisis by assets, and the second-largest in US history. Millions of dollars are tied up with many customers of the bank businesses and start ups. According the Australian Financial Review, in the past few years, Silicon Valley Bank had made a ‘concerted push’ to get Australian clients onboard with the bank, successfully attracting a number of companies to its services including Crimson Education, an educational platform, Morse Micro, a local semiconductor maker, and the BHP-backed mine sensor firm Plotlogic.
Australian Financial Review identified that Canva, an Australian graphic design platform had an account with the bank, however Canva has reportedly claimed the majority of its cash was outside Silicon Valley Bank and that it had “safety nets in place” to ensure its operations were not compromised.
According to Australian Treasurer Jim Chalmers, the government was aware some Australian firms have been impacted but added the country’s “institutions are solid (and) our banking sector is well-capitalised.”
“We are closely monitoring the situation and potential impacts for Australia,” Chalmers said in a statement.
According to Reuters, most Australian startups should be insulated from the direct impact.
A number of Australian tech companies have been revealed to have banked with SVB, and more than a dozen ASX-listed companies disclosing their exposure to Silicon Valley Bank, with AFR finding assets totaled $50 million of deposits collectively tied up in the Bank.
Several Australian venture capital firms have also confirmed that some of their start-ups had deposits with SVB and could be exposed at a small level.
Australian financial tech company Airwallex is even profiting from the collapse. Founder Jack Zhang reached out to Silicon Valley Bank clients with frozen money with the collapsed bank, offering his product to clients looking for a “strong global financial infrastructure.” Airwallex told the Herald Sun this week that already more than 250 new companies have signed up or expressed an interest to join Airwallex’s platform following this outreach. Airwallex allows clients to open bank accounts in various currencies so they can better make international payments in multiple currencies.
According to the AFR, under the terms of Silicon Valley Bank receivership, only $US250,000 in deposits will definitely be returned to depositors via insurance, with the rest reliant on the bank being acquired or a potentially lengthy liquidation process.
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