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Concerns about the fall-out from the crash of Silicon Valley Bank linger despite a guarantee from the US Federal Reserve.
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‘No material exposure’ to troubled SVB, Xero assures ASX
13 March 2023
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Xero has raced to assure the stockmarket it has no “material exposure” to the troubled Silicon Valley Bank following its meltdown in the US late last week.
“As at 10 March 2023 Xero’s total exposure to SVB was approximately US$5 million, reflecting Xero’s local transactional banking relationships with SVB in the US and UK,” it told the ASX this morning.
“That amount represents less than 1 per cent of Xero's cash and cash equivalents as at September 30 2022.”
The 40-year-old tech specialist bank was the second largest US bank to fail and concerns about the potential fall-out escalated over the weekend until the US Federal Reserve stepped in yesterday to guarantee deposits.
“To support American businesses and households, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors,” it said.
“This action will bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy.”
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The move means depositors will get their money in full, regardless of whether the amount is above the US government guarantee of US$250,000.
The mood of caution saw bank shares in Australia plunge 1-2 per cent today although Xero stock held on to most the gains it made in the wake of announcement last wake that it would cut up to 800 jobs globally and shutter its lending platform Waddle.
The move was part of a wholesale reorganisation to reduce costs that would involve up to $40 million in write-downs this financial year and up to $35 million in restructuring costs in FY24.
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