Wednesday, March 22nd | 29 Adar 5783

March 13, 2023 7:57 am

Israel to Mull Bailing Out Tech Companies Hurt by US Bank Collapse

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Far right Israeli politicians Itamar Ben Gvir (l) and Religious Zionism Party head Bezalel Smotrich (r) are seen at a Knesset session. Photo: Reuters/Abir Sultan – Israeli Prime Minister Benjamin Netanyahu said on Saturday night that he would consider bailing out Israeli companies affected by the collapse on Friday of the Silicon Valley Bank.

“I am closely monitoring the collapse of the American investment bank Silicon Valley Bank (SVB), which has led to a major crisis in the high-tech world. From Rome, I have held talks with senior high-tech figures in Israel. Upon my return to Israel, I will discuss the scope of the crisis with the finance and economy ministers and the governor of the Bank of Israel,” said Netanyahu.

The Israeli premier arrived in Italy on Thursday for a three-day diplomatic visit.

“If necessary, out of responsibility to Israeli high-tech companies and employees, we will take steps to assist the Israeli companies whose center of activity is in Israel to weather the cash-flow crisis that has been created for them due to the turmoil,” he said.

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SVB was the sixteenth largest bank in the United States, and its failure following a bank run is the country’s second-largest ever after the collapse of Washington Mutual during the 2008 global financial crisis.

It held an estimated $150 billion in uninsured deposits, according to the company’s financial statements from last month, and more than $200 billion in assets at the end of last year.

Regulators estimate that the bank had seen roughly $40 billion in outflows in a short period of time, leading to the bank’s collapse.

The US Federal Deposit Insurance Corporation said that all customers with insured deposits—namely, accounts worth less than $250,000—would have full access to their money by Monday morning. The FDIC said that uninsured depositors—those with accounts exceeding $250,000—would get some of their money back, but did not specify how much.

Bloomberg reported that 93 percent of SVB’s accounts were uninsured.

Companies that did business with SVB have warned that the bank’s failure may force thousands of layoffs, and prevent workers from receiving their next paycheck.

California Gov. Gavin Newsom said Saturday that he was in talks with the White House to help “stabilize the situation as quickly as possible, to protect jobs, people’s livelihoods, and the entire innovation ecosystem that has served as a tent pole for our economy.”

Federal officials were facing growing pressure on Sunday to bail out even huge customers of the failed bank.

Israeli Finance Minister Bezalel Smotrich said that he was forming a special committee to investigate the potential consequences for Israel from the collapse.

“We promised to work for the Israeli economy so that it is an island of stability and certainty amid the world’s turbulent economic waters, and we will do so, with God’s help,” said Smotrich on Saturday.

“The State of Israel stands with the local high-tech industry and will help it get through the crisis so that it can continue its developmental momentum and success.”

Netanyahu stressed that the collapse did not threaten Israel’s economy, which he said was “strong and stable.”

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