With the Fed raising interest rates at a rapid clip, Silicon Valley Bank saw the value of their existing bonds get lower — ultimately selling their assets and taking a $1.8 billion loss.
Banks are big investors in assets like Treasury bills because they need lots of safe places to park their cash. Many financial institutions piled into these investments during a period of historically-low interest rates that spanned the early years of the pandemic, as banks took in tons of new deposits and lending was somewhat restrained.
The withdrawals at SVB's Silicon Valley Bank have come from startups and technology firms, many of which also ran into new trouble once the Fed began raising rates. Banks don't have to realize losses on bonds that may have gone down in value amid rising rates if they're not pushed to sell these assets. But Silvergate Capital and SVB Financial didn’t have that choice. Customer withdrawals at Silvergate Bank and SVB’s Silicon Valley Bank forced their hand.At Silvergate, which caters to cryptocurrency clients, customers yanked their money in the panic that followed the 2022 collapse of cryptocurrency exchange FTX.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Silicon Valley Bank spooks Silicon ValleySilicon Valley Bank, long one of the most popular financial institutions among tech and life sciences startups, saw its shares fall more than 60% on Thursday, wiping out a whopping $9.4 billion in market value.
Read more »
Silicon Valley Bank Rocked, Bank Shares PlummetA financial free fall is happening right now in the Bay Area. One of the most trusted local banks is in trouble and now there’s growing concern that some companies are withdrawing their funds, which could spell doom.
Read more »
Bank stocks plunge after implosions at Silicon Valley Bank and SilvergateBank stocks plunge after implosions at Silicon Valley Bank and Silvergate Capital send 'shock waves' through the sector
Read more »
Silicon Valley Bank drops another 45%, weighing on the bank sector againShares of SVB Financial Group, known as Silicon Valley Bank, tumbled for a second day Friday and weighed on the whole banking sector again.
Read more »
Silicon Valley Bank drops another 60%, weighs on the bank sector againShares of SVB Financial Group, known as Silicon Valley Bank, tumbled for a second day Friday and weighed on the whole banking sector again.
Read more »
First Republic leads regional bank rout as Silicon Valley Bank crisis raises fears about bond lossesFirst Republic leads rout in regional banks as SVB crisis raises fears about bond losses
Read more »