The recent collapse of Silicon Valley Bank (SVB) was fueled by "people on iPhones" and won't have a ripple effect across the US banking sector, according to Steve Schwarzman, CEO of investment firm Blackstone.
Rapid withdrawals "by people on iPhones" and high interest rates were cited as reasons for the downfall of SVB, which specialized in serving technology startups in Silicon Valley. The bank had been struggling with non-performing loans before it finally collapsed earlier this month.
Schwarzman assured investors that other banks are not at risk of suffering a similar fate. He explained that SVB's business model was unique and its failure was due to specific issues within the company.
"The situation at SVB was unfortunate, but I don't see this as an indication of larger problems within the US banking system," Schwarzman said in a statement. "The underlying causes behind its collapse were related to factors specific to their business model."
Despite his reassurances, industry experts have warned against complacency. They argue that rapid withdrawals by customers could become an issue for other banks if there is a sudden loss of confidence in the financial system.
As for Silicon Valley Bank's clients, they are now scrambling to find new banking options following the institution's implosion. Many startups rely heavily on their relationship with their bank and may struggle to secure financing from new lenders.
This story serves as a reminder that even successful institutions can fall victim to unforeseen circumstances. It also highlights the importance of maintaining strong relationships between banks and their clients - especially during times of crisis.