What happened at the Silicon Valley Bank and why does it matter?

After the Silicon Valley Bank on Wednesday launched a $1.75 billion share sale to shore up its balance sheet and navigate declining deposits from startups struggling for funds amid increased spending the stocks took a hit massively.

The company's shares suffered their worst drop in over 35 years on Thursday. Following a capital offering that caused SVB Financial Group's stock to collapse 60 percent and contributed to the loss of over $80 billion in value from bank shares, the company hurried on Thursday to convince its venture capital clients that their money was safe.

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.

The Santa Clara, California-based SVB announced a public offering, liquidated nearly all of the securities in its portfolio that were on the market, and revised its annual forecast to reflect a more significant fall in net interest income.

“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 as they invest in their businesses,” SVB Chief Executive Officer Greg Becker said in a letter to shareholders Wednesday.

As a result of this, US bank stocks tumbled by the most in almost three years. On Thursday, the KBW Bank Index declined 7.7 percent facing its biggest drop since June 2020. Further Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. all slid nearly 5 percent.

European banks are headed for the largest single-day fall in nine months. Here's how the European banking stocks are faring: