US bank woes? Silicon Valley Bank stocks plunge 1 day after Silvergate downfall

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Concerns about the future of another U.S. bank have risen this week after Silicon Valley Bank (SVB) announced a major sale of assets and shares to raise additional funding.

However, some investors are concerned that not all is well with tech startups and VC-focused banks, especially given that cryptocurrency bank Silvergate shut down just a day ago. There is a possibility that Silicon Valley Bank stock has fallen more than 60% of his, wiping about $80 billion in value from the bank’s stock.

SVB is one of the top 20 largest banks in the US and provides banking services to crypto-friendly ventures such as Sequoia and Andreessen Horowitz (a16z).

In the settlement of accounts on March 8 updatesaid it sold $21 billion worth of securities holdings at a loss of $1.8 billion to bolster its balance sheet.

It has also raised $500 million from venture firm General Atlantic and is looking to sell another $1.75 billion in equity, for a total of $2.25 billion.

It said the sale was made in anticipation of “continued rising interest rates, pressure on public and private markets, and rising levels of cash burn as clients invest in their businesses.”

However, SVB’s share price fell 60% on March 9 following the earnings announcement. according to Investors were concerned about the bank’s financial health and invested in Google Finance. After-hours trading was also down another 23%.

According to March 9th report According to an article in The Information, SVB chief executive Greg Becker told investors to “keep calm” and that banks “with one exception do not have sufficient liquidity to support their customers. Yes, it will be difficult if the SVB are telling each other they have a problem.”

with a stakeholder letterBecker reaffirmed that the bank was “well capitalized”, had “one of the lowest loan-to-loan ratios of any bank of our size”, and made capital from sales “more Asset sensitive, short-term securities.

Many share concerns about the potential repercussions if SVB’s customers cause a bank run.

But on Twitter, founders and tech executives expressed their support for the bank and urged people not to panic.

Mark Suster of Upfront Ventures murmured March 9th, “More people in the VC community need to speak publicly to calm the panic on this subject. [SVB]”

3/ We believe the biggest risk for startups and VCs (and SVBs) is mass panic. The classic “running the bank” hurts the whole system. People are making a public joke about this. No joke, this is a serious problem.treat it like that

— Mark Suster (@msuster) March 9, 2023

“I think everyone can only go wrong if they panic, so it encourages a fact-based and calm decision,” he added.

In response to the news, Zak Kukoff, principal at venture capital firm General Catalyst, said banks have “consistently given way” to startups, adding that “now is the right time to support them.” It’s time,” he added.

SVB has consistently done its best to do the right thing for startups and the ecosystem.Now is the perfect time to support them

— Zack Kukoff (@zck) March 9, 2023

Related: Silver Gate’s collapse sparks debate over who it was really to blame

The uncertainty surrounding SVB comes just a day after Silvergate announced it would “wind down” and liquidate its crypto-friendly bank.

In an announcement on March 8, Silvergate Capital Corporation Said The decision to cease operations was made “in light of recent industry and regulatory developments.”

Silvergate has been one of the primary banking partners of many cryptocurrency companies, but concerns about its solvency have surfaced following its announcement to delay the filing of its annual 10-K report by two weeks. This document provides an overview of the company’s financial situation.