An Indian bank became a victim of the SVB collapse in the most unexpected way

The collapse of Silicon Valley Bank (SVB) has led to a massive upheaval in the banking sector across the world. The SVB is known to be linked to technology startups and venture capital. The sudden collapse of the 16th largest American bank created jitters in the market and led to worries that it will lead to widespread turmoil.

However, one Indian bank that has a similar name as the SVB had to endure a different kind of problem. As soon as the SVB collapse started to make headlines, Mumbai-based SVC Bank found itself becoming an unexpected victim. Rumours started swirling about the Indian bank and it was forced to release a clarification to shut down all reports linking it to SVB.

“SVC Bank is completely unrelated to Silicon Valley Bank (SVB) that was based in California. We request our members, customers and other stakeholders not to pay attention to baseless rumours and mischief-mongering by unscrupulous elements insinuating similarities in brand names. SVC Bank reserves the right to take due legal action on rumour mongers for tarnishing its brand image” the statement by the bank said.

SVC, formerly known as The Shamrao Vithal Co-operative Bank, is a 116-year-old bank. Its total business adds up to over Rs 31,500 crore and a net profit of over Rs 146 crore.

SVB became the topic of discussion across the world after US regulators pulled the plug on Silicon Valley Bank on Friday. The move had a horrible effect on global banking shares sputtering. America's biggest banking failure since the 2008 financial crisis led to fears of a possible catastrophe in the markets.

US authorities soon seized the assets of SVB after a run on deposits made it no longer tenable for the medium-sized bank to stay afloat on its own.

SVB has been a key lender to US startups since the 1980s. It soon becamethe 16th largest US bank by assets. At the end of 2022, it had $209 billion in assets and approximately $175.4 billion in deposits.

On Monday, HSBC Holdings acquired the UK arm of the SVB for one pound through a private sale brokered by the Bank of England and the British government.

"Silicon Valley Bank (UK) Ltd has today been sold to HSBC... Customers of SVB UK will be able to access their deposits and banking services as normal from today," said a Treasury statement, adding that the deal involved no taxpayer support.

(With inputs from agencies)

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