• Silicon Valley Bank (SVB) has experienced a significant downturn in its shares, falling more than 60% since Thursday.
• In an effort to recoup losses, SVB launched a $1.75 billion securities sale on Wednesday.
• California regulators have closed the bank, causing concern among investors and employees alike.
Silicon Valley Bank in Crisis
Silicon Valley Bank (SVB) has followed the financial freefall amid Federal Reserve (Fed) Chairman Jerome Powell’s hawkish macroeconomic view and tightening policies to control inflation rates. With over 40 years in the market, Silicon Valley Bank is facing a significant downturn in its shares, falling more than 60% since Thursday.
On Wednesday, the go-to bank for venture capitalists and tech startups launched a massive $1.75 billion securities sale to raise capital and try to recoup its earlier losses, raising concerns among investors. According to several reports, the financial institution was closed by Californian regulators.
What’s Happening with SVB?
Before today’s events, the Silicon Valley Financial Group was considering options for exiting the crisis, including a sale after the heavy lender sent shockwaves through global markets and battered its shares on the Nasdaq stock market. According to a Reuters report, Silicon Valley Bank needed the proceeds to plug a $1.8 billion hole caused by selling a $21 billion loss-making bond portfolio consisting primarily of U.S. Treasuries.
Effects on Investors & Employees
Investors in SVB’s stock were puzzled as to whether the capital raised by the bank would be sufficient to cover its losses. This perception arose from the continued decline in the fortunes of technology startups due to policies aimed at controlling inflation, which affects the technology sector that the bank serves. According to