Israel stocks drop on SVB failure as government vows aid for tech firms

Silicon valley bank collapse: Netanyahu intends to discuss the scope of the crisis with finance and economy ministers, as well as Bank of Israel governor, to see 'if there are any necessary actions to help Israeli companies that have fallen into distress'
Israeli shares slid more than 2.5% on the Tel Aviv Stock Exchange (TASE) on Sunday led by financial firms following the failure of Silicon Valley Bank (SVB) late last week, while the government vowed to help Israeli tech firms affected.
  • Follow Ynetnews on Facebook and Twitter

  • With Israel's trading week running Sunday through Thursday, it was the first opportunity for Tel Aviv investors to react to the failure of Silicon Valley Bank, the largest bank to fail since the 2008 financial crisis but largely seen as an isolated event.
    3 View gallery
    סיליקון ואלי בנק
    סיליקון ואלי בנק
    (Photo: AP)
    Banking regulator Yair Avidan said the SVB failure was an unfortunate opportunity to stress what is often taken for granted - ensuring the stability of the financial system.
    "We are closely examining the case and following the developments, both immediate and those that may come in the 'next waves'," said Avidan, the Bank of Israel's Supervisor of Banks.
    He said he was taking part in an inter-ministerial team established by Finance Ministry to monitor, analyze and formulate a response as needed.
    3 View gallery
    יאיר אבידן
    יאיר אבידן
    Yair Avidan
    (Photo: Bank of Israel spokesperson)
    Israel's tech sector is the country's main growth engine and its relationship with the Silicon Valley region is strong. Many Israeli startups had accounts at SVB although the amounts are not fully known.
    Compugen Ltd (CGEN.TA), said that through its U.S. subsidiary, it currently held about 1.3% of its cash and cash equivalents with SVB, but "considers its exposure to any liquidity concern at SVB as immaterial."
    NextVision (NXSN.TA), a maker of micro-stabilized cameras, said in a regulatory filing in Tel Aviv that it withdrew on Thursday almost all of the $2.7 million it held in SVB.
    Qualitau Ltd (QLTU.TA), a developer of test equipment for the semiconductor industry, said it had nearly $17 million at SVB and most of that was not federally insured.
    It added it had "no information regarding the amounts of money it will be able to withdraw in the future from the balance of funds deposited in SVB and in relation to the timing when it will be possible to withdraw these funds."
    Qualitau added that given an existing backlog of orders, it was able to continue activities.
    The Tel Aviv index of the five largest banks (.TELBANK5) was down 2.8% in afternoon trading, while the index of eight insurers (.TAINS) fell 4.5%. Government bond prices rose as much as 1.5%.
    Prime Minister Benjamin Netanyahu said he would discuss the scope of the crisis with his finance and economy ministers and the Bank of Israel governor to see "if there are any necessary actions to help Israeli companies that have fallen into distress, especially liquidity distress, following the collapse of SVB."
    "We have an obligation, of course, to try to protect these companies, whose main operations are in Israel and will remain in Israel, and also their employees," he told cabinet ministers in a veiled rebuke to high-tech executives who have actively protested the government's planned judicial reforms and those who have said they would pull money out of Israel.
    He added that Israel's economy is "one of the safest and most stable economies in the world."
    "We stand by the Israeli hi-tech companies and will accompany them even in moments of crisis," said Finance Minister Bezalel Smotrich.
    3 View gallery
    השר בצלאל סמוטריץ'
    השר בצלאל סמוטריץ'
    Finance Minister Bezalel Smotrich
    (Photo: Shalev Shalom)
    Data published on Sunday showed Israel's economy grew 6.4% in 2022 and an annualized 5.6% in the fourth quarter.
    Israel's two largest banks, Leumi (LUMI.TA) and Hapoalim (POLI.TA), said their tech banking arms would issue loans to startups and other tech firms that were without access to credit in the wake of SVB's collapse.
    Leumi said that it was able to help customers transfer about $1 billion to Israel from SVB prior to the Federal Deposit Insurance Corporation (FDIC) being named as receiver for the later disposition of the U.S. bank's assets.
    The commenter agrees to the privacy policy of Ynet News and agrees not to submit comments that violate the terms of use, including incitement, libel and expressions that exceed the accepted norms of freedom of speech.