Silicon Valley Bank’s collapse rattled the U.S. Now, Canada braces for aftershocks

Silicon Valley Bank's collapse has some worried about a contagion spreading to financial institutions north of the border. Here's what to know about risks for Canada.

The swift collapse of Silicon Valley Bank (SVB) has sent aftershocks through the global financial system and Canada is not immune from the impacts.

The Toronto-based branch of the startup-focused financial institution was temporarily seized by Canada’s banking regulator on Sunday night as Finance Minister Chrystia Freeland echoed her American counterparts in calling for calm in the face of market uncertainty and fears of contagion spreading to banks north of the border.

Experts who spoke to Global News on Monday said that most Canadians can be confident in the country’s banking system, but fallout from SVB’s collapse could be more substantial in some parts of the economy.

Here’s what to know.

U.S. regulators were forced on Friday to urgently close California-based SVB after billions of dollars were withdrawn by fearful depositors, leading to a run on the bank. Silvergate Capital, which was known for its cryptocurrency-friendly operations, also shut down voluntarily late last week and Sunday saw U.S. regulators move to close New York-based Signature Bank.

Shares of U.S. regional banks slumped on Monday, led by sharp losses in First Republic Bank, spurring fears it could be next if a “contagion” emerges — the term referring to spreading instability through the financial system.

John Ruffolo, a Canadian venture capitalist with 30 years of experience in the technology industry, says the speed at which SVB went from normal operations to completely wrapped up was “shocking.”

“I am absolutely shocked at the swiftness of how the entire fiasco unfolded,” the founder and managing partner of Mavericks Private Equity told Global News on Monday.