JERUSALEM, March 15 (Xinhua) -- The collapse of Silicon Valley Bank (SVB) in the United States has got a serious impact on Israel's high technology sector, a pillar of the country's economic growth, while the government is trying to help the impacted firms to overcome the crisis.
The fallout of SVB failure hit the headlines of Israel's news outlets in the past few days. In an article titled "A Black Weekend for Israeli High-tech After SVB Collapse" published on its website, Israel's influential newspaper Haaretz noted that Israeli high-tech firms and startups endured a weekend of anxiety and panic after the tailspin that led to the collapse of Silicon Valley Bank.
"Several Israeli companies rushed to get their money out of SVB and move it to other banks in the United States and Israel. According to LeumiTech, its teams helped its customers move about 1 billion U.S. dollars to Israel," it reported.
There is an Israeli startup that deposits tens of millions of dollars, about 90 percent of its money, in SVB, the CEO of an Israeli startup told Haaretz. "Under those circumstances, you have to be prepared to fire the whole company within a few months. There are also (companies) that have 100 percent of their deposits in SVB," he said.
As the only OECD country in the Middle East, Israel has over 6000 high-tech companies and start-ups, some of which are deeply interconnected with the United States.
Israel's high-tech sector accounted for over half of the country's total exports in 2022, according to an Israel Innovation Authority (IAA) report.
The Times of Israel said as the go-to lender of tech startups in Israel, the failure of the tech-focused lender "sent shock waves into Israeli tech industry over the weekend, fueling concern of furloughs if affected local startups with accounts at SVB can't meet payroll in coming weeks."
Israeli business news website Globes pointed out that the collapse of SVB had raised immediate concerns about the impact on Israeli institutional investors, saying that though at present no Israeli institutional investors hold SVB shares directly, they have invested hundreds of millions of dollars in the bank's investment funds and venture capital funds.
In response to the concerns and anxiety caused by SVB in Israel, Prime Minister Benjamin Netanyahu said at this week's cabinet meeting that he "will consider - with the finance and economy ministers, and the governor of the Bank of Israel - whether or not actions are necessary to assist Israeli companies in distress, mainly with cash-flow, due to the collapse of the Silicon Valley Bank."
"Of course, we are obligated to protect our companies, the main activity of which is - and will remain - in Israel, as well as their employees," he added.
Israeli Minister of Finance Bezalel Smotrich has announced the formation of a team to examine the consequences of the collapse of SVB in the United States for Israel's technology industry and to formulate recommendations for aid.
According to a statement from the Ministry of Finance, the team will contact local technology companies, venture capital firms, and financial institutions in Israel and the United States to acquire data and analysis on the potential impact on the Israeli economy, and will design solutions for Israeli enterprises if needed.
"The collapse of the bank is a significant event for both the U.S. and Israeli economies," Smotrich said, stressing that Israel "will stand with the local technology industry and will help it to overcome the crisis and continue its development and its business."
