Economy

BEIJING (Reuters) -Xi Jinping secured a precedent-breaking third term as president of China on Friday during a parliamentary session in which he tightened his control of the world’s second-largest economy as it emerges from a COVID slump and diplomatic challenges mount.Nearly 3,000 members of China’s rubber-stamp parliament, the National People’s Congress (NPC), voted unanimously in the Great Hall of the People for the 69-year-old Xi in an election in which there was no other candidate.Xi has taken China on a more authoritarian path since assuming control a decade ago, and he extends his tenure for another five-year term amid increasingly adversarial relations with the U.S. and its allies over Taiwan, Beijing’s backing of Russia, trade and human rights.Domestically, China faces a challenging recovery from three years of Xi’s zero-COVID policy, fragile confidence among consumers and businesses and weak demand for China’s exports.The economy grew just 3% last year, among its worst performances in decades. During the parliament session the government set a modest growth target for this year of just around 5%.”In his third term, Xi will need to focus on economic revival,” said Willy Lam, senior fellow at the Jamestown Foundation, a U.S. think tank. “But if he continues with what he has been doing – tighter party and state control over the private sector and confrontation with the West, his prospects for success won’t be encouraging.”Russian President Vladimir Putin was among the first foreign leaders to congratulate Xi on his third term. The two sealed a “no limits” partnership between China and Russia in February last year, days before Russia launched its invasion of Ukraine.Xi set the stage for another term when he did away with presidential term limits in 2018, and has become China’s most powerful leader since Mao Zedong, who founded the People’s Republic.The presidency is largely ceremonial, and Xi’s main position of power was extended last October when he was reconfirmed for five more years as general secretary of the central committee of the Communist Party.In Washington, U.S. President Joe Biden remained focused on managing strategic competition with China, White House spokesman John Kirby (NYSE:KEX) said. “Mr Xi’s third term is certainly coming as no surprise to anyone here. That was all highly expected,” Kirby said.NEW LEADERSHIP SLATEDuring Friday’s voting, Xi chatted with premier-in-waiting Li Qiang, who is poised to be confirmed in Saturday to China’s second-highest post, a role that puts the former Shanghai party chief and Xi ally in charge of the economy.Other Xi-approved officials are due to be elected or appointed to government posts during this weekend, including vice premiers, a central bank governor and numerous other ministers and department heads.The annual parliamentary session, the first since China dropped three years of COVID restrictions, will end on Monday, when Xi will give a speech that will be followed by a media question-and-answer session by Li.During Friday’s session, Xi and dozens of other top leaders on the stage did not wear masks but everyone else in the auditorium did.China ended its zero-COVID policy in December after highly unusual nationwide protests against the curbs that stifled daily life and the economy. The virus, which emerged in China in late 2019, then spread rapidly to infect most of its 1.4 billion people but authorities have not released a full tally of related deaths.The parliament on Friday also elected Zhao Leji, 66, as parliament chair and Han Zheng, 68, as vice president. Both men were from Xi’s previous team of party leaders at the Politburo Standing Committee. More

(Reuters) – The sudden collapse of Silicon Valley Bank on Friday sent shockwaves through the startup community, which has come to view the lender as a source of reliable capital and deposit partner, particularly for some of tech’s biggest moonshots.On Friday, tech CEOs scrambled to make payroll after SVB Financial Group was shuttered by California banking regulators in a bid to protect depositors following a dive in the value of its investment holdings and a rush of withdrawal requests starting just two days ago.The bank was seeking a sale, sources told Reuters, and trading in its shares was halted after they plummeted 60% late Thursday.Startups with money held at Silicon Valley Bank raced to come up with plans to pay workers after hearing their funds would be locked up over the weekend, said Jai Das, president at Sapphire Ventures, whose investments have included Box and LinkedIn. “Some of the folks have moved their money out of SVB to other banks,” he said. “Hearing CEOs who are figuring out ways to use their own capital or own funds to fund some of the payroll.”VC investors are discussing solutions for startups that have funds stuck with SVB and struggling to process payroll to employees and vendors, including offering a line of credit to portfolio companies.”That’s the number one conversation and the one thing people can actually do something about right now,” said Pegah Ebrahimi, Managing Partner at FPV Ventures. “I think institutions, VCs, and babies have to come together to solve this short-term liquidity squeeze and help otherwise resilient companies have access to funds to make payroll.”Dean Nelson, CEO of Cato Digital, was on a line outside of SVB’s Santa Clara headquarters, hoping to get answers. He said he was worried about the company’s ability to pay employees and cover expenses.”Access to the cash is the biggest problem for the majority of the companies here. If you’re a startup, cash is king. The cash and the workflow, to be able to have the runway is critical.”At some Silicon Valley Bank branch locations in California, depositors gathered early Friday to attempt to get their cash out, fearing it could be inaccessible in the coming days. And at some sites the doors were locked and cursory notes were found advising customers to try elsewhere.At a Menlo Park, California, branch, customers were greeted by a taped up press release apprising them the bank had moved into receivership and would be known as Deposit Insurance National Bank of Santa Clara.The bank has been central to the formation of many early stage companies due to its reputation for taking bets on startups that may have had little chance of survival otherwise and for which larger banks may find far too risky. It has had financial relationships with a who’s who of Silicon Valley firms over the years, including Snapchat’s parent Snap Inc (NYSE:SNAP).The full extent of the fallout from the bank’s crash could take weeks or months to gauge and might presage a period of more cautious investing in technology startups. A Silicon Valley Bank spokeswoman didn’t immediately respond to a request for comment sent Friday.The FDIC said Friday that insured depositors will regain access to their deposits no later than Monday, when branches reopen under the control of the regulator.’HEART STOPPED’The speed of the bank’s precipitous decline caught the startup community by surprise.Ashley Tyrner, CEO of startup FarmboxRx, was on vacation with her family in Costa Rica Thursday afternoon when she said she started getting frantic text messages from her chief operating officer, who had initiated an eight-figure wire transfer, completely emptying their Silicon Valley Bank account.Tyrner said she wondered if her co-founder had gone mad. “She’s just pinging me over and over and texting my kid,” Tyrner said in an interview. “‘SVB is going under,'” her partner texted, said Tyrner. “‘We have to get our funds out, please approve this wire.'”Tyrner was thwarted when she discovered the bank’s website wasn’t working. “My heart stopped,” she said. As of Friday, FarmboxRx’s funds were still tied up with Silicon Valley Bank.”‘My bank is going to go under’ had never crossed my mind,” she said.The fate of Silicon Valley Bank cast new doubts on the funding environment just as some bright spots were emerging, particularly for artificial intelligence startups, amid the grim fallout of 2022 that led many technology companies to trim jobs and pare back spending on riskier projects.Brex, another fintech startup, said it is offering an emergency bridge credit line to startup customers to support payroll and other operational spending needs in light of the situation.Arjun Sethi, a co-founder of venture firm Tribe Capital, sent a sobering note to clients Friday that he shared on social media. “The venture ecosystem is wandering in the desert. Liquidity is dry,” he wrote. “Hold your assets in the most liquid traditional banks, and do not take unnecessary risks.” More

NEW YORK (Reuters) -Greg Becker, the chief executive of SVB Financial Group, sent a video message to employees acknowledging the “incredibly difficult” 48 hours leading up to the collapse of its Silicon Valley Bank on Friday.”It’s with an incredibly heavy heart that I’m here to deliver this message,” he said in a video seen by Reuters. “I can’t imagine what was going through your head and wondering, you know, about your job, your future.”The Federal Deposit Insurance Corp was named receiver of Silicon Valley Bank after California banking regulators closed it on Friday.While the FDIC has taken control of the lender, Becker said he is working with banking regulators to find a partner for the bank, but there is “no guarantee” a deal will be struck.Becker wore a black zip-up jacket with a logo from Gleneagles, a luxury golf resort in Scotland, and spoke from a room framed by dark cabinets. He asked employees to “hang around, try to support each other, try to support our clients, work together” to get a better outcome for the company. “Thank you, and my heart is with you,” he said. More

In an interview with CNN Brasil, Finance Minister Fernando Haddad stressed that investors need a long-term horizon to commit to projects in the country. “The fiscal framework will offer this,” he said, reiterating that the proposal would be unveiled later this month.The fiscal framework is a set of budget guidelines designed to balance government revenue and expenditures.Haddad said public debt needs to be monitored, but that a debt target is unworkable because it would cause constraints to what he described as the “harmonization” of government spending policies and borrowing costs set by the central bank.The rules follow Lula’s securing of congressional approval for a multi-billion reais spending package that bypasses a constitutional spending cap, in line with one of the leftist leader’s campaign promises.On Thursday, Brazil’s planning and budget minister, Simone Tebet, said that the new fiscal rules will address concerns to eliminate the budget deficit, stabilize public debt, and include investments backed by Lula that promote economic growth. More

Young companies raced to get their money out of the bank, which was central to the start-up industry. Some said they could not make payroll.Ashley Tyrner opened an account with Silicon Valley Bank for her company, FarmboxRx, two years ago. She was setting out to raise venture capital and knew the bank was a go-to for the start-up industry.On Thursday, after reading about financial instability at the bank, she rushed to move FarmboxRx’s money into two other bank accounts. Her wire transfers didn’t go through. And on Friday, Silicon Valley Bank collapsed, tying up cash totaling eight figures for her company, which delivers food to Medicare and Medicaid participants.“None of my reps will call me back,” Ms. Tyrner said. “It’s the worst 24 hours of my life.”Her despair was part of the fallout across the start-up ecosystem from the failure of Silicon Valley Bank. Entrepreneurs raced to get loans to make payroll because their money was frozen at the bank. Investors doled out and asked for advice in memos and on emergency conference calls. Lines formed outside the bank’s branches. And many in the tech industry were glued to Twitter, where the collapse of a linchpin financial partner played out in real time.The implosion rattled a start-up industry already on edge. Hurt by rising interest rates and an economic slowdown over the past year, start-up funding — which had been supercharged by low interest rates for years — has shriveled, resulting in mass layoffs at many young companies, cost-cutting and slashed valuations. Investments in U.S. start-ups dropped 31 percent last year to $238 billion, according to PitchBook.On top of that, the fall of Silicon Valley Bank was especially troubling because it was the self-described “financial partner of the innovation economy.” The bank, founded in 1983 and based in Santa Clara, Calif., was deeply entangled in the tech ecosystem, providing banking services to nearly half of all venture-backed technology and life-science companies in the United States, according to its website.Silicon Valley Bank was also a bank to more than 2,500 venture capital firms, including Lightspeed, Bain Capital and Insight Partners. It managed the personal wealth of many tech executives and was a stalwart sponsor of Silicon Valley tech conferences, parties, dinners and media outlets.The bank was a “systemically important financial institution” whose services were “immensely enabling for start-ups,” said Matt Ocko, an investor at the venture capital firm DCVC.On Friday, the Federal Deposit Insurance Corporation took control of Silicon Valley Bank’s $175 billion in customer deposits. Deposits of up to $250,000 were insured by the regulator. Beyond that, customers have received no information on when they will regain access to their money.That left many of the bank’s clients in a bind. On Friday, Roku, the TV streaming company, said in a filing that roughly $487 million of its $1.9 billion in cash was tied up with Silicon Valley Bank. The deposits were largely uninsured, Roku said, and it did not know “to what extent” it would be able to recover them.Josh Butler, the chief executive of CompScience, a workplace safety analytics start-up, said he was unable to get his company’s money out of the bank on Thursday or before the bank’s collapse on Friday. The last day, he said, had been nerve-racking.“Everyone from my investors to employees to my own mother are reaching out to ask what’s going on,” Mr. Butler said. “The big question is how soon will we be able to get access to the rest of the funds, how much if at all? That’s absolutely scary.”CompScience was pausing spending on marketing, sales and hiring until it solved more pressing concerns, like making payroll. Mr. Butler said he had been prepared for a big crunch, given the doom and gloom swirling around the industry.But “did I expect it to be Silicon Valley Bank?” he said. “Never.”Camp, a start-up selling gifts and experiences for children, added a banner to its website on Friday that read: “OUR BANK JUST CLOSED — SO EVERYTHING IS ON SALE!”The site offered 40 percent off with the promo code “bankrun” alongside a meme that included the words “i never liked the bay area” and “how could this happen.” A Camp representative said the sale was related to Silicon Valley Bank’s collapse and declined to comment further.Sheel Mohnot, an investor at Better Tomorrow Ventures, said his venture firm advised its start-ups on Thursday to move money into Treasuries and open other bank accounts out of prudence.“Once a bank run has started, it’s hard to stop,” he said.Some of the start-ups that Mr. Mohnot’s firm has invested in chose not to move their money, while others were unable to act in time before the bank failed, he said. Now their biggest concern was making payroll, followed by figuring out how to pay their bills, he said.Haseeb Qureshi, an investor at Dragonfly, a cryptocurrency-focused venture capital firm, said his firm was counseling several of its start-ups that had funds tied up in Silicon Valley Bank.“The first thing you think about is survival,” he said. “It’s a harrowing moment for a lot of people.”Other start-ups were benefiting from the bank’s collapse. On Friday afternoon, Brex, a provider of financial services to start-ups, unveiled an “emergency bridge line of credit” for new customers migrating from Silicon Valley Bank. The service was aimed at helping those start-ups shore up expenses like payroll.For part of Thursday, Brex received billions of dollars in deposits from several thousand companies, a person with knowledge of the situation said. The company rushed to open accounts as fast as possible to meet demand, with its chief executive reviewing applications, the person said.But by Thursday afternoon, the incoming deposits to Brex slowed to a halt, as founders began reporting that Silicon Valley Bank’s online portal had frozen and customers were no longer able to access their money, the person said.A man trying to enter a Silicon Valley Bank branch in Manhattan on Friday. David Dee Delgado/ReutersMany venture capital firms had also used lines of credit with Silicon Valley Bank to make investments quickly and smoothly, Mr. Ocko of DCVC said. Those lines of credit are now frozen, he said.Mr. Ocko added that he did not foresee systemic collapse among start-ups and tech, but predicted “pain and friction and uncertainty and complexity in the middle of what’s already a painful macro environment for start-ups.”To stave off any taint from Silicon Valley Bank, some venture funds blasted updates to their backers. Sydecar, a service that facilitates venture capital deals, shared a list of the banks it uses that were not affected. Origin Ventures promised to help companies “create contingency plans around working capital.”Another venture firm outlined its exposure to Silicon Valley Bank and apologized in a memo, saying, “This is the worst email I’ve ever had to write to you.” The memo was seen by The New York Times.Entrepreneurs also weighed into group chats with the dollar amounts that they could no longer tap at Silicon Valley Bank or what they had managed to pull out, ranging from hundreds of thousands to tens of millions, according to communications viewed by The Times.A trickle of customers walked up to Silicon Valley Bank’s branch in Menlo Park, Calif., on Friday afternoon and discovered that its doors were locked. Some read an F.D.I.C. notice, taped by the entrance, that said the regulator was in control.One person who tried the doors was carrying a Chick-fil-A bag. A woman in the office cracked a door open, asked who the person was and then took the bag with a smile. Then she pulled the door shut.Reporting was contributed by More

During China’s annual political congress this weekend, a slew of the country’s officials are expected to step down. Most prominent among them is the embattled premier Li Keqiang, as well as top economic adviser Liu He.Over their decades-long careers, the current cadre became experts at marketing China’s opportunities to western investors. Two months ago, Liu prompted glowing headlines from Davos, when he said that China was back at the table. Now, Liu and his cohort are retiring. They were a generation of policymakers defined by their experience of the Reform and Opening Up era, spearheaded by Deng Xiaoping in the late 1970s. The new group of leaders “does not have a strong commitment in that direction”, says Arthur Kroeber, author of China’s Economy. Instead, what unites them is their loyalty to president Xi Jinping. Their economic ideologies, if any, are difficult to discern.Many in China are heralding the end of the reform era. Some observers predict the repeat of a cycle lurching between liberal markets and state planning. But this prediction ignores the country’s economic history. To look ahead, let us first look back.The death of Mao in 1976 cleared the way for a new mix of economic ideas. That decade brought exchanges with western economists, such as World Bank ambassadors, who championed abstract models of perfect competition.China’s future leaders, however, maintained a healthy scepticism of pure theory. Isabella Weber, author of How China Escaped Shock Therapy, calls theirs a “dual identity”: a generation that had an awareness of the price-setting role of the market, but were also shaped by real-world experiences of experimentation and gradualism. In Deng’s words, they were “feeling the stones to cross the river”.Beijing created its own “developmentalist” mixture: it kept the focus on production over consumption, but prioritised light industry, helping the country climb on to the manufacturing value chain. Private markets were expanded from the 1980s onwards, and China said it would endeavour to continue doing so in order to join the World Trade Organization in 2001.“Since the beginning of reform, China has used the market as a tool that coexists with planning. Rather than switching from Stalinism to neoliberalism, China has embraced a mix of elements that has at times confounded foreign observers into thinking it was undergoing wholesale westernisation,” says Weber.In China’s authoritarian capitalist regime, both the state and the market dominate all spheres of life. My experience of living in Beijing in the 2010s reflects this. There used to be a lucrative business for people paid to queue on your behalf at oversubscribed state hospitals. But if you knew the right officials, you didn’t need to queue at all. To some extent, money can substitute for state connections — or buy them.Earlier this month, in his last government report, Li called for Beijing to “give priority to the recovery and expansion of consumption”. But the new group of leaders will be familiar with the opposite tendency from their local government days: the prioritisation of production. China’s economy in recent decades has been characterised by an attachment to GDP growth targets, and to meeting them through debt-financed infrastructure stimulus.“Too much of China’s elite power structure is built around transfers from the household sector to businesses and governments. Now we need a reversal of those transfers,” says Michael Pettis, professor at Peking University.What is missing from China’s authoritarian capitalism is social infrastructure and purchasing power in the hands of the people. State enterprises get the bulk of access to credit, and private enterprises compete with state enterprises on an uneven playing field. Private-sector workers suffer as a result, but ordinary state employees aren’t doing so well either.Unlike in Europe, China’s economists skipped straight from Marx to the free market theories of von Mises without a Keynesian interlude. From the 1980s, Beijing dismantled social infrastructure while insufficiently developing services such as national healthcare, a robust education system and unemployment credits.Investing in these would address the dire human capital problems documented by Scott Rozelle and Natalie Hell in their book Invisible China, such as rural anaemia and cognitive stunting. It would also help workers through shocks like the pandemic.It is sad to see the end of the reform era. If Beijing can grasp the opportunity, an even better age might beckon. It would mean breaking policymaking taboos and the grip of vested economic interests. But it would be a return to [email protected] More

Unequal access to Covid-19 vaccines in 2021 led to one preventable death every 24 seconds, according to an open letter signed by prominent political figures, activists and academics that marks the third anniversary since the World Health Organization first described the coronavirus outbreak as a pandemic.The more than 190 signatories urge world leaders to pledge that “never again will the lives of people in wealthy countries be prioritised” over those in poorer ones. They say publicly funded medical innovations should be treated as “global common goods” and used to maximise health rather than profits. The letter, whose signatories include Nobel economics laureate Joseph Stiglitz, ex-OECD chief Ángel Gurría and a host of former presidents and prime ministers, adds that these principles should be embedded in the Pandemic Accord discussions on how to prevent or manage future disease outbreaks, under way at the WHO. The People’s Vaccine Alliance, a coalition of some 100 organisations that works to improve access to inoculations, co-ordinated the letter. The figure for deaths is based on a study in the journal Nature Medicine, published last year, that said an estimated 1.3mn fewer people would have perished in 2021 had vaccines been distributed more equitably.Covid-19 has killed more than 6.8mn people globally, according to Johns Hopkins University — a figure widely thought to be an underestimate — and damaged economies and health systems.The WHO does not have the legal authority to declare pandemics. It gave Covid-19 the highest possible designation under international health regulations — calling it a “public health emergency of international concern” — in January 2020 but started using the term “pandemic” on March 11 that year after countries were slow to heed its warnings.The health body sustained significant criticism for being too slow to act after the disease emerged and for being too lenient on China, where the virus is thought to have originated.Inequality marred vaccine procurement efforts at the height of the pandemic. Wealthy countries secured doses early and in excess of their needs, leaving poorer ones to rely on schemes such as Covax, the international initiative that distributes jabs to low and middle income nations but which has had mixed success. When vaccines became more readily available, poorer countries with fragile infrastructure struggled to absorb and distribute them. In remarks accompanying the letter, former UN secretary-general Ban Ki-moon, one of the signatories, said the “great tragedy” of the pandemic had been “the failure of multilateralism”.“These past three years should act as a warning for future pandemics. We need a return to genuine co-operation between nations in our preparation and response to global threats,” he said.

The signatories said co-operation would require removing intellectual property barriers during pandemics. The industry and some national governments fiercely resisted such attempts as Covid-19 continued to spread. A voluntary initiative by the WHO, known as C-Tap, failed to attract significant support. The signatories accuse the pharmaceuticals industry of making “extraordinary profits, increasing prices in the Global North while refusing to share technology and knowledge with capable researchers and producers in the Global South”. Billions of people in poorer countries, including frontline workers and the clinically vulnerable, “were sent to the back of the line”, they said.The industry has dismissed these claims, saying there was little demand and poor absorption capacity in poorer countries. More

(Reuters) – Startup-focused lender SVB Financial Group became the largest bank failure since the financial crisis on Friday, in a sudden collapse that roiled global markets and stranded billions of dollars belonging to companies and investors.California banking regulators closed the bank, which did business as Silicon Valley Bank, on Friday and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver for later disposition of its assets.The main office and all branches of Silicon Valley Bank will reopen on March 13 and all insured depositors will have full access to their insured deposits no later than Monday morning, the FDIC said. But 89% of the bank’s $175 billion in deposits were uninsured as the end of 2022, according to the FDIC, and their fate remains to be determined. Companies such as video game maker Roblox Corp and streaming device maker Roku (NASDAQ:ROKU) Inc said they had hundreds of millions of deposits at the bank. Roku said its deposits with SVB were largely uninsured, sending its shares down 10% in extended trading.Technology workers whose paychecks relied on the bank were also worried about getting their wages on Friday. An SVB branch in San Francisco showed a note taped to the door telling clients to call a toll-free telephone number. The FDIC said it would seek to sell SVB’s assets and that future dividend payments may be made to uninsured depositors.At times in the past, the FDIC has moved quickly, even striking deals to sell major banks over the weekend. SVB did not respond to calls for comment. Graphic: Silicon Valley Bank’s failure is first since 2020 https://www.reuters.com/graphics/USA-BANKS/SILICONVALLEY/zdpxdxzlwpx/chart.png The collapse sent shockwaves through the startup community, which has come to view the lender as a source of reliable capital.The bank’s customers were met with locked doors on Friday. A client dashboard was down, a UK-based client of the bank told Reuters.Dean Nelson, CEO of Cato Digital, was on a line outside of SVB Santa Clara headquarters, hoping to get answers. Nelson said he was worried about the company’s ability to pay employees and cover expenses. “Access to the cash is the biggest problem for the majority of the companies here. If you’re a startup, cash is king. The cash and the workflow, to be able to have the runway is critical.”The problems at SVB, which quickly escalated after the bank said on Wednesday it would raise money, underscore how a campaign by the U.S. Federal Reserve and other central banks to fight inflation by ending the era of cheap money is exposing vulnerabilities in the market. The worries walloped the banking sector. U.S. banks have lost over $100 billion in stock market value over the past two days, with European banks losing around another $50 billion in value, according to a Reuters calculation. Regional banks sold off on Friday.U.S. lenders First Republic Bank (NYSE:FRC) and Western Alliance (NYSE:WAL) said on Friday their liquidity and deposits remained strong, aiming to calm investors as their shares fell. Others such as Germany’s Commerzbank (ETR:CBKG) issued unusual statements to reassure investors. Some analysts forecast more pain for the sector as the episode spread concern about hidden risks in the banking sector and its vulnerability to the rising cost of money. “There could be a bloodbath next week as banks are in trouble, the short sellers are out there and they are going to attack every single bank, especially the smaller ones,” said Christopher Whalen, chairman of Whalen Global Advisors. U.S. Treasury Secretary Janet Yellen met with banking regulators on Friday expressed “full confidence” in their abilities to respond to the situation, Treasury said.The White House on Friday said it had faith and confidence in U.S. financial regulators, when asked about the failure of SVB. Cecilia Rouse, who chairs the Council of Economic Advisers, said the U.S. banking system was fundamentally stronger than it was during the 2008 financial crisis.”The first bank failure since 2020 is a wake-up call,” said Matthew Goldberg, an analyst at Bankrate. Graphic: SVB stock performance month-to-date https://www.reuters.com/graphics/SVB%20FINANCIAL%20GROUP-STOCK%20OFFERING/zdpxdxzkbpx/chart_eikon.jpg The genesis of SVB’s collapse lies in a rising interest rate environment. As higher interest rates caused the market for initial public offerings to shut down for many startups and made private fundraising more costly, some SVB clients started pulling money out.To fund the redemptions, SVB sold on Wednesday a $21 billion bond portfolio consisting mostly of U.S. Treasuries, and said it would sell $2.25 billion in common equity and preferred convertible stock to fill its funding hole. Its stock collapsed and depositors started to panic. SVB scrambled this week to reassure its venture capital clients their money was safe. By Friday, the collapsing stock price had made its capital raise untenable and sources said the bank tried to look at other options, including a sale, until regulators stepped in and shut the bank down.After the FDIC announcement, employees received an email from the company saying they would be contacted by officials about employment and compensation, according to a source who declined be identified. As of Friday evening, there had not been any further communication from the company or the FDIC, the source said. The last FDIC-insured institution to close was Almena State Bank in Kansas, on October 23, 2020. (Writing By John O’Donnell, Noor Zainab Hussain, Paritosh Bansal; Additional reporting by Niket Nishant, Emma-Victoria Farr, Nathan Frandino, Anna Tong, Krystal Hu, Greg Bensinger, Pete Schroeder, Jo Mason, Marc Jones, Iain Withers, Elizabeth Howcroft, Noel Randewich, Yoruk Bahceli, Lananh Nguyen, Eva Matthews and Nupur Anand; Writing by Nick Zieminski; Editing by Toby Chopra and Anna Driver) More