Prime Minister Benjamin Netanyahu promised he would help rescue Israeli companies damaged by the collapse of US investment bank Silicon Valley Bank (SVB).
Netanyahu met with Finance Minister Bezalel Smotrich, Economy Minister Nir Barkat and Bank of Israel Governor Amir Yaron to discuss the collapse.
“The fall of the SVB bank is causing a deep crisis in the high-tech world. I held talks in Rome with high-tech officials in Israel,” he said over the weekend during an official visit to Italy.
“The government is committed to helping Israeli high-tech companies and their employees, if necessary. We will take steps to help companies with operations in Israel overcome the liquidity crisis caused by this upheaval,” the prime minister outlined.
He added that Israel’s economy is “strong and stable, and this is again reflected in this crisis.”
CONTAMINATION: Customers queue outside First Republic Bank to withdraw money after SVB collapse
Credit: @Dr_PhillipB via Spectee/TMX
Smotrich said a team comprising officials from the Bank of Israel, Securities Authority, Treasury and Innovation Authority would be formed to deal with the fallout.
“The State of Israel will stand alongside the local tech industry and help it through the crisis,” Smotrich wrote on Twitter.
Nearly half of the US-based technology and healthcare companies that went public last year were clients of Silicon Valley Bank.
The announcement came as Israel is embroiled in nationwide protests against the government’s planned reform of the country’s left-wing judiciary. Israel has the second highest number of startups per capita than any place in the world other than Silicon Valley.
I can’t help but think of the irony of some Israeli startups taking their money out of Israel because they fear the economy is collapsing and putting it into SVB.
This is how the second largest bank collapse in US history happened in 48 hours! https://t.co/1EujfuyBkM
— Hillel Fuld (@HilzFuld) March 11, 2023
In recent weeks, Israelis from the tech sector have taken to the streets to protest against judicial reform. At the same time, many founders have opted to pull their money out of Israel because of the reform plans, including tech giants like Riskified, whose CEO Eido Gal decided to withdraw all of the company’s half-billion-dollar cash reserves from Israel, and Papaya.
Ironically, since the SVB crash, Israeli companies have been rushing to get their money back to Israel. A company called LeumiTech, which helps businesses transfer money, has so far helped its customers move more than $1 billion to Israel since Friday’s shock announcement.
The Haaretz Daily quoted the CEO of an Israeli startup, which has a large portion of its capital in SVB, as describing a frenzied downward spiral as news of the collapse emerged. In the end, he failed to raise his company’s money on time.
“This is something you read about in books, but it’s not just something I’ve never experienced, I never in a million years thought it was possible with SVB, a bank with a strong reputation and brand, regarded as the number one bank for starters. What can you rely on? Money in the bank. And suddenly even what you think is the most fundamental basis of your work is undermined.”