On March 10, 2023, market observers are discussing the troubles Silicon Valley Bank (SVB) faces, as the firm’s stock slid more than 60% in the last 24 hours. SVB was forced to sell a $21 billion bond portfolio at a $1.8 billion loss. CEO Greg Becker insists that the financial institution “will be well positioned” and is “well capitalized” going forward. SVB’s stock, SIVB, was halted during the premarket trading session on Friday after the bank announced it would release news.
As SVB’s Foundations Shake, Concerns Grow Over a Potential Bailout and Market Instability
Market strategists and investors are focused on Silicon Valley Bank (SVB) and U.S. financial institutions as a whole following the voluntary liquidation of Silvergate Bank. SVB is dealing with significant financial woes after the company’s stock, SIVB, shed more than 60% during Thursday’s trading session. SVB is well-known for its portfolio of tech and venture capital deals, but venture capital activity has slid 30% lower over the last 12 months. SVB customers spending funds at a rapid pace has made it so SVB’s cash burn is much higher than venture investing.
Then SVB revealed it was selling its available-for-sale (AFS) bond portfolio for $21 billion, and the bank lost a total of $1.8 billion from the sale. “We are taking these actions because we expect continued higher interest rates, pressured public and private markets, and elevated cash burn levels from our clients,” SVB CEO Greg Becker said in a statement. “When we see a return to balance between venture investment and cash burn, we will be well-positioned to accelerate growth and profitability.”
Silicon Valley bank has been halted .
Down 80% in two days now 35. pic.twitter.com/lvZjMUHxzE
— TIC TOC TIC (@TicTocTick) March 10, 2023
It’s been said that SVB made some horrible investment decisions prior to the interest rate hikes, and the bank’s $21 billion bond portfolio was not yielding above cash burn, and the AFS bond’s value depleted significantly. Because SVB invested in government-backed debt products like U.S. Treasury bills, the Federal Reserve’s rate hikes put the bank in a bad position, and SVB deposits started to dwindle at a fast pace. Some people believe that if SVB crashes, the failure could be nearly as big as the Washington Mutual (Wamu) bankruptcy.
Good Morning Everyone! Silicon Valley Bank is getting worse. Customers trying to pull millions of dollars out and can’t….
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