Silicon Valley Bank's bankruptcy has led to a severe crisis in the US financial market, and will possibly bring broader problems to the rest of the world. But here in China, Silicon Valley Bank's joint company with Shanghai's Pudong Development Bank is continuing normal operations. Chen Tong reports from Shanghai.
Silicon Valley Bank's failure has triggered a dramatic slump in the stock market worldwide. Stock markets in US, Europe, and Asia have dropped sharply so far this week.
Professor Hu Jie, who worked as a senior economist at the US Federal Reserve, says the turmoil will probably last for a while.
HU JIE, Professor at Shanghai Advanced Institute of Finance, Shanghai Jiao Tong University "The trouble by the SVB is probably well-contained already because the regulators already stepped in. Another thing is the possible systemic risk for the banking system is well-contained as I can see. In terms of fundamental reasons, I don't see a lot of troubles ahead. But that does not exclude of possibility of emotional response for the secondary market. This secondary response will probably last for a few days, but will not last forever."
CHEN TONG Shanghai "Shanghai Pudong Development Bank and Silicon Valley Bank set up a joint bank. How do you think the situation of SVB will affect the joint bank here in Shanghai?"
HU JIE, Professor at Shanghai Advanced Institute of Finance, Shanghai Jiao Tong University "This bank is an independent entity and independent bank. The only relationship technically speaking is Silicon Valley has 50 percent share in this joint venture. But that's all. As SVB event unfolds, a lot of drama will happen in Silicon Valley, but will not affect the operation of this joint venture in China."
CHEN TONG Shanghai "This building behind me is where the SPD Silicon Valley Bank headquarters is. Shanghai Pudong Development Bank and Silicon Valley Bank each own 50 percent of the company, and the joint bank runs independently. Shanghai Pudong Development Bank published a notice earlier, to say that the joint bank has its own balance sheet and has been following Chinese regulations in running its business."
So far, the joint bank is continuing as normal. But if situation gets worse, Professor Hu says it's likely that the 50 percent share owned by SVB will be sold to other firms. CHEN TONG, CGTN, SHANGHAI.