“Americans can have confidence that the banking system is safe. Your deposits will be there when you need them”, Biden said in a White House speech on Monday.

Biden’s intervention seeks to reassure US jittery consumers and markets in light of SVB’s collapse on Friday. On Sunday, the Federal Deposit Insurance Corporation took over New York-based Signature Bank, citing systemic risk most likely due to its big lender role in the digital assets space.

Biden insisted management of the two failed banks will be fired. He said investors would not be protected from the fallout, and the revenue of bank fees would cover losses to the Deposit Insurance Fund.

The US president’s remarks came amid concerns that American taxpayers would have to cover the losses prompted by SVB’s collapse in a stark. Biden promised to ask Congress and regulators to strengthen bank rules.

US banks teeter under SVB collapse

When Wall Street opened on Monday, bank stocks tumbled. According to Bloomberg, The KBW Bank Index was initially down by 12.4%, later making a slight recovery.

Regional banks were leading the downturn.

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Bank First Republic’s shares dropped by as much as 70%. Western Alliance Bancorporation’s stock price fell from $48 on Friday to $8.04 in the early hours of Monday, marking a 76% drop – its largest ever.

Similarly, big banks could not fend off the fallout from the collapse of two American banks in the span of just a few days.

Bank of America – whose stock price fell as much as 7.9% on Monday – saw its worst day since January 2020. Wells Fargo or Citi went through the worst drop in share prices since January 2021.

However, American investment banker Lloyd Blankfein dismissed the possibility that SVB’s financial troubles would hurt the biggest US banks.

“A few banks may have issues like SVB, but only a few. Govt actions removed reasons for bank runs. Biggest banks have much tougher regulation and stress testing. Anxiety and volatility high, but sharply lower interest rates, fed likely on hold, are strong positives for markets”, Blankfein said in a post on Twitter.

SVB collapse sends shockwaves across the world

Elsewhere around the world, institutions scrambled to reassure nervous investors and people.

German financial regulator BaFin imposed a moratorium on SVB’s branch in Germany, blocking payments to and from customers.

BaFin said the situation did not threaten the financial stability of the country.

In the UK, the Bank of England sold Silicon Valley Bank’s UK division to HSBC for £1. The proposal for sale to His Majesty’s Treasury, The Prudential Regulation Authority and The Bank of England came from a coalition of private equity firms led by The Bank of London.

HSBC Group CEO Noel Quinn welcomed the move: “This acquisition makes excellent strategic sense for our business in the UK. It strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the UK and internationally”.

“We welcome SVB UK’s customers to HSBC and look forward to helping them grow in the UK and around the world. SVB UK customers can continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety and security of HSBC. We warmly welcome SVB UK colleagues to HSBC, we are excited to start working with them”, Quinn said in a press release statement.