homebusiness NewsSilicon Valley Bank stock crashes: Twitter calls it a 'Lehman Moment for the start up world'

Silicon Valley Bank stock crashes: Twitter calls it a 'Lehman Moment for the start-up world'

Silicon Valley Bank stock crashes: Twitter calls it a 'Lehman Moment for the start-up world'
Read Time4 Min(s) Read
Profile image

By CNBCTV18.com Mar 10, 2023 6:37:43 PM IST (Updated)

SVB's CEO Gregory Becker has been reportedly calling clients to assure them their money is safe, after the bank’s shares dropped 60 percent during a share sale.

SVB Financial Group (SVB), which does business as Silicon Valley Bank (SVB), scrambled on Thursday (March 9) to reassure clients that their money with the bank was safe after a capital raise caused a steep 60 percent collapse in its share value, wiping out over $80 billion in value from bank shares.

Recommended Articles

View All

SVB had launched a $1.75 billion share sale on Wednesday to shore up its balance sheet. As per an investor prospectus the bank needed the proceeds to plug a $1.8 billion hole caused by the sale of a $21 billion loss-making bond portfolio mostly consisting of US Treasuries, Bloomberg reported.
The portfolio was yielding an average 1.79 percent return which was far below the current 10-year Treasury yield of around 3.9 percent.
Also read:

However, investors in SVB's stock fretted that the capital raise would be sufficient given the deteriorating fortunes of many technology start-ups that the bank serves. The company's stock collapsed to its lowest level since 2016, and its shares slid another 26 percent in extended trade after the market closed.

The ramifications of the crisis have spread to Sweden — SVB's plunge wiped out more than half of the value of the holdings that Alecta — Sweden's largest pension fund — had in the bank. According to a Bloomberg report, Alecta, the fourth largest shareholder in SVB, lost 54 percent in terms of value of its stake after the Californian bank lost 60 percent   in stock value on Thursday.

Reuters reported that SVB's CEO Gregory Becker has been calling clients to assure them their money with the bank is safe, citing sources.

Since the collapse began, some start-ups have been advising their founders to pull out their money from SVB as a precautionary measure. As per the report, one of them is Peter Thiel's Founders Fund.

Social media has been abuzz as the news broke. One user said "if SVB fails, it could be a Lehman moment for the startup world."

Another user prayed for it to pull through and called it a ‘Sad day for tech’.

While another commented that “We got ourselves a bank run” referring to the large group of investors pulling their money from the bank.

A user pointed out that SVB is three times the size of FTX and its collapse will be “the 2nd largest bank failure in US history.”

Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
View All

Most Read

Market Movers

View All
Top GainersTop Losers