SVB Financial Group (SIVB.O) hurried on Thursday to convince its venture capital clients that their money was safe after a capital increase caused its stock to fall 60%, wiping out over $80 billion in value from bank shares.
SVB, also known as Silicon Valley Bank, started a $1.75 billion share sale on Wednesday in order to strengthen its balance sheet.
It stated in an investor prospectus that the revenues would be used to close a $1.8 billion hole left by the sale of a $21 billion loss-making bond portfolio dominated by US Treasuries. The portfolio was returning an average of 1.79%, which was well below the current 10-year Treasury yield of roughly 3.9%.
Investors in SVB stock were concerned that the capital increase would be insufficient, given the bank’s service to numerous technological firms. The company’s stock dropped to its lowest level since 2016, and shares fell another 26% after the market closed.
According to two persons familiar with the situation, SVB CEO Gregory Becker has been calling clients to reassure them that their money is secure with the bank.
According to the reports, some firms have advised their founders to withdraw their funds from SVB as a precautionary step. According to one of the reports, one of them is Peter Thiel’s Founders Fund.
On Thursday, one San Francisco-based business told Reuters that they successfully moved all of their funds out of SVB.
RAED MORE :IN A NEW PHOTOGRAPH, PAULINA PORIZKOVA, 58, WEARS BLACK UNDERWEAR AS SHE EMBRACES AGING.