The SVB failure is having serious consequences for the California wine industry.
California’s wine industry is on the brink of a financial crisis following the collapse of Silicon Valley Bank.
The bank had been the main financial institution for bank for wineries in the Golden State for almost three decades.
The California Department of Financial Protection and Innovation closed the bank on Friday following a run by venture capital customers.
On Friday night, thousands of wineries found that they were completely locked out of their accounts with no clear timeline as to when they might be able to access their funds…
Wineries represented 2 percent of the bank’s total loan business but the ramifications are far-reaching including an inability to pay employees, bills, or credit card payments. Silicon Valley Bank, the nation’s 16th largest bank, had extended more than $4 billion in loans to wineries and vineyards since 1994.
Interesting that it says “16th largest” when just two days it was being reported as the 14th largest. But this demonstrates the folly of both the easy credit economy and allowing banks to buy other banks, as the consequences of single failure points become considerably more serious. In this case, the negative effects are crossing not only the United States, but the Atlantic Ocean.
Following SVB’s collapse, tech companies in Britain have had their accounts frozen, meaning they have no access to their money and are unable to pay staff.
Major firms such as online retail giant Shopify and Pinterest are also directly affected by the failure.
UK business leaders have raised concerns that the failure could create further problems in Britain, warning they face going bust if they cannot get their funds from the bank – which could cause thousands of job losses.
There are also fears the crash of the bank will spread around the world, with bases in countries including China, India and across Europe.
These knock-on effects may have even affected us. Starting Friday night, without any reason being provided or communication from our account manager, Castalia was suddenly locked out of one of our regular book production sites for the first time in nine years. This will have no effect on the Library, but could affect our traditional book publishing business. Fortunately, we already have an alternative lined up, although I very much doubt that it will be necessary.
UPDATE: Yellen: No federal bailout for collapsed Silicon Valley Bank
UPDATE: Treasury: New York State regulators are shuttering Signature Bank – a major New York bank – adding that all depositors both at Signature Bank, and also the now insolvent Silicon Valley Bank, will have access to their money on Monday.