Silicon Valley Bank Boss Calls Investors Not To Panic
Shares of SVB Financial Group, known as Silicon Valley Bank, tumbled Friday before the bank was closed by regulators. The failure raised fears that more banks would incur heavy losses in their bond portfolios.
Launching from CNBC, Monday (13/3), SVB CEO Greg Becker, made calls with SVB clients to reassure them about the bank's failure.
SVB shares fell 60 percent in premarket trading last Friday (10/3). Previously the bank was in talks to sell itself after attempts to raise capital failed. However, the rapid outflow of deposits outweighed the selling process, which made it difficult for any buyer to exercise a realistic assessment.
Concern among founders and venture capital investors spiked earlier this week after Silicon Valley Bank shocked the market by announcing late Wednesday it needed to raise $2.25 billion in shares. The bank was forced to sell all available-for-sale bonds at a loss of USD 1.8 billion as startup clients withdrew deposits.
Getting to Know Bank Run, Cause of Bankruptcy of Silicone Valley
But on the other hand, SVB's customers said they weren't earning trust after Becker urged them to keep calm in a Thursday afternoon call, and the stock's tumble continued, topping 60 percent in late trading.
In a letter, SVB said it was selling substantially all of its available-for-sale securities which consisted mostly of US Treasurys. The bank also previously reported more than $90 billion in held-to-maturity securities, which are unlikely to incur a loss unless forced to sell before maturity to cover fleeing deposits.
Because the Federal Reserve consistently raises interest rates, it lowers the value of Treasurys. For example, the iShares 20+ Treasury Bond ETF, which consists of Treasurys with longer maturities, is down 24 percent in the past 12 months.
Investors are also concerned about a lack of support from tech startup funding base Silicon Valley Bank, an area hit hard by a slumping stock market and soaring interest rates.Shares of SVB Financial Group, known as Silicon Valley Bank, tumbled Friday before the bank was closed by regulators. The failure raised fears that more banks would incur heavy losses in their bond portfolios.
Launching from CNBC, Monday (13/3), SVB CEO Greg Becker, made calls with SVB clients to reassure them about the bank's failure.
SVB shares fell 60 percent in premarket trading last Friday (10/3). Previously the bank was in talks to sell itself after attempts to raise capital failed. However, the rapid outflow of deposits outweighed the selling process, which made it difficult for any buyer to exercise a realistic assessment.
Concern among founders and venture capital investors spiked earlier this week after Silicon Valley Bank shocked the market by announcing late Wednesday it needed to raise $2.25 billion in shares. The bank was forced to sell all available-for-sale bonds at a loss of USD 1.8 billion as startup clients withdrew deposits.
Getting to Know Bank Run, Cause of Bankruptcy of Silicone Valley
But on the other hand, SVB's customers said they weren't earning trust after Becker urged them to keep calm in a Thursday afternoon call, and the stock's tumble continued, topping 60 percent in late trading.
In a letter, SVB said it was selling substantially all of its available-for-sale securities which consisted mostly of US Treasurys. The bank also previously reported more than $90 billion in held-to-maturity securities, which are unlikely to incur a loss unless forced to sell before maturity to cover fleeing deposits.
Because the Federal Reserve consistently raises interest rates, it lowers the value of Treasurys. For example, the iShares 20+ Treasury Bond ETF, which consists of Treasurys with longer maturities, is down 24 percent in the past 12 months.
Investors are also concerned about a lack of support from tech startup funding base Silicon Valley Bank, an area hit hard by a slumping stock market and soaring interest rates.