Allies try to stem fallout from bank collapse

NEW YORK — Governments in the United Kingdom and the United States took extraordinary steps to stop a potential banking crisis after the historic failure of Silicon Valley Bank, even as another major bank was shut down.

The UK Treasury and the Bank of England announced early on Monday that they had facilitated the sale of Silicon Valley Bank UK to HSBC, Europe's biggest bank, ensuring the security of 6.7 billion pounds ($8.1 billion) of deposits.

British officials worked throughout the weekend to find a buyer for the UK subsidiary of the California-based bank. Its collapse was the second-largest bank failure in history.

US regulators also worked all weekend to try to find a buyer. Those efforts appeared to have failed Sunday, but US officials assured all depositors that they could access all their money quickly.

The announcement came amid fears that the factors that caused the Santa Clara, California-based bank to fail could spread.

In a sign of how fast the financial bleeding was occurring, regulators announced that New York-based Signature Bank had also failed and was being seized on Sunday. At more than $110 billion in assets, Signature Bank is the third-largest bank failure in US history.

The near-financial crisis left Asian markets jittery as trading began on Monday. Japan's benchmark Nikkei 225 sank 1.6 percent in morning trading, Australia's S&P/ASX 200 lost 0.3 percent and South Korea's Kospi shed 0.4 percent.

In an effort to shore up confidence in the banking system, the Treasury Department, Federal Reserve and the Federal Deposit Insurance Corporation, or FDIC, said on Sunday that all Silicon Valley Bank clients would be protected and able to access their money. They also announced steps that are intended to protect the bank's customers and prevent additional bank runs.

Under the plan, depositors at Silicon Valley Bank and Signature Bank, including those whose holdings exceed the $250,000 insurance limit, will be able to access their money on Monday.

Also Sunday, another beleaguered bank, First Republic Bank, announced that it had bolstered its financial health by gaining access to funding from the Fed and JPMorgan Chase.

Extensive intervention

In a separate announcement, the Fed late on Sunday announced an expansive emergency lending program that's intended to prevent a wave of bank runs that would threaten the stability of the banking system and the economy as a whole. Fed officials characterized the program as akin to what central banks have done for decades: Lend freely to the banking system so that customers would be confident that they could access their accounts whenever needed.

Though Sunday's steps marked the most extensive government intervention in the banking system since the 2008 financial crisis, its actions are relatively limited compared with what was done 15 years ago. The two failed banks themselves have not been rescued, and taxpayer money has not been provided to the banks, The Associated Press commented.

US President Joe Biden said on Sunday evening as he boarded Air Force One back to Washington that he would speak about the bank situation on Monday. In a statement, Biden also said he was "firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again".

Regulators had to rush to close Silicon Valley Bank, a financial institution with more than $200 billion in assets, on Friday when it experienced a traditional run on the bank where depositors rushed to withdraw their funds all at once. It is the second-largest bank failure in US history, behind only the 2008 failure of Washington Mutual.

Agencies, Heng Weili in New York and Xinhua contributed to this story.