Silicon Valley Bank goes bankrupt, seeks to sell itself
A bank run has made Silicon Valley Bank fatal. With that, one of the spiders in the web of start-ups in the tech mecca of California dies.
Regulator FDIC closed the doors at Silicon Valley Bank (SVB) on Friday. It is the largest bank to go bankrupt in the United States in more than a decade. The bank was struggling with a huge loss of confidence, so that the outflow of customer funds could no longer be controlled.
The first nail to SVB’s coffin was struck on Wednesday. Then the bank announced to issue new shares for 2.25 billion dollars (2.1 billion euros). That turned out to be necessary due to a significant loss of $ 1.8 billion on the investment portfolio.
The CEO of parent holding SVB Financial, Greg Becker, then called on his customers to remain calm and support the bank, ” as we have supported our customers for forty years.” But that call was addressed to deaf ears.
Several influential venture capitalists, including the Founders Fund of tech billionaire Peter Thiel, advised their clients to take money away from SVB. That set off a bank run, a rush on bank funds because savers fear their money is no longer safe.
Investors were also panicking. The share of parent holding SVB Financial fell by 60 percent on Thursday to its lowest level since september 2016. Silicon Valley Bank was valued at $ 40 billion last year.
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