JERUSALEM (VINnews) — Almost all the Israeli hi-tech companies had some exposure to the collapse of the Silicon Valley Bank last Friday. The bank, which serviced tech companies, experienced difficulties due to the sharp rise in interest rates. Within a short time customers withdrew tens of billions of dollars and the American regulators were forced to close the bank.
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Shaul Olmert, son of former prime minister Ehud Olmert and CEO of Piggy, says that everyone he knows succeeded in withdrawing from their current accounts but the deposits which could not automatically be moved are now in limbo and it is unclear when if ever they will be fully released.
Olmert told Israel’s N12 channel that the bank offered hi-tech companies solutions for raising capital which regular banks wouldn’t accept due to the companies’ inability to show a positive cash flow at the initial stages. “They were the boutique bank of companies around the world and especially in Israel. There is almost no start-up, large or small, which wasn’t helped by them.”
Olmert says that some companies could be affected in the near future. “There will be some companies which won’t survive the wait for the additional capital. Others will wait it out, like during coronavirus when one didn’t see all the deaths at the beginning”, he added
The Federal reserve froze assets of 175 billion dollars at the end of the week. The bank’s unique asset became its liability as hi-tech companies increasingly feeling the crunch withdrew large sums and couldn’t manage their loans. The bank held US bonds and when the interest rates rose was forced to pay back at higher rates and needed cash which caused the customers to withdraw assets.
A number of Israeli companies have announced that their assets are tied up in the bank, while others said that they had succeeded in withdrawing cash. The Israeli finance ministry has set up a ministerial committee to investigate the companies affected by the bank’s meltdown and to offer help where necessary. In the meantime other tech finance companies such as Brex, a competitor of SVB, have announced that they will help new and current customers to receive cash as they wait for the release of capital by federal authorities.
Go woke, go broke. The company was more focused on diversity and fairness than on capital return. And there you have it.
A gang of Israeli hi-tech companies worth billions who wanted to punish Israel for judicial reform pulled out of Israeli banks and stuffed their loot into this bank , now lost it all. Don’t bail them out and let their stockholders sue them.
Start up nation this zionist dream?