Money was withdrawn just hours before feds seized Silicon Valley Bank.
The Times of Israel reports that two of the countries largest banks were able to
transfer $1 billion out of Silicon Valley Bank to accounts in Israel before the bank collapsed. Silicon Valley Bank (SVB), the 16th largest bank in the United States at the time of its failure late last week, collapsed after a run on deposits and was placed into the receivership of the Federal Deposit Insurance Corporation (FDIC).
The bank’s collapse is the second biggest bank failure in U.S. history, with the FDIC being forced to guarantee 100 percent of both insured and uninsured customer deposits.
While the collapse of SVB took many by surprise, including many in the US, financial agencies in Israel were apparently ahead of the curve. “Israel’s two largest banks, Bank Leumi and Bank Hapoalim, set up a situation room that has been operating around the clock to help firms transfer their money from SVB — before it was seized — to accounts in Israel,” reports the Times of Israel.
“Over the past few days, teams at LeumiTech, the high-tech banking arm of Bank Leumi, have been able to help their Israeli clients transfer about $1 billion to Israel, the bank said.”
While many companies in the U.S. were not able to withdraw funds before the bank’s failure, Ha’aretz reports that “a good many Israeli companies had been able to get their money out in time, but that it was clearly not the case for everyone” and that “companies whose deposits are now locked will seek to conceal this, concerned that any rumors might drive away customers, suppliers and employees.”
With Israel already receiving $10 million a day via U.S. taxpayers, it remains unclear if the FDIC will be returning any money to Israeli companies that was previously held with SVB.
“While the fund going to the depositors is paid into by U.S. banks, it is ultimately backstopped by the Treasury Department — and therefore U.S. taxpayers,” reported the Washington Post.
The bank's crash was reportedly caused by the market losing faith in the banks performance which triggered a run on it. The implosion of SVB rippled across global markets, as investors debated whether the bank's collapse was due to its unique position catering to the troubled tech sector, or might be a signal of broader risks in the banking sector.