US Silicon Valley Bank branch in Santa Clara, Calif., March 10, 2023.
New York – California banking regulators have closed SVB Financial Group, the parent company of Silicon Valley Bank. The collapse of SVB is the largest bank failure in the US since the height of the financial crisis in 2008, the AP reported. The Federal Deposit Insurance Corporation (FDIC) was appointed as administrator of the bank. She stated that the bank's assets amount to USD 209 billion (CZK 4.6 trillion) and deposits to USD 175.4 billion.
SVB specializes in technology companies backed by venture capital. This week, the bank announced that it wants to raise capital by more than two billion USD. She cited clients running out of cash as one of the reasons she wants to raise new capital. Rising interest rates, fears of a recession and a slowdown in the initial public offering market are making it difficult for startup companies to raise additional cash. This appears to have caused corporate deposits with banks such as SVB to decrease.
The bank's shares fell 60 percent on Thursday in response to the news of the capital increase. Shares lost another 66 percent in open trading today before trading was halted pending further news.
Wall Street analysts had earlier said they did not see SVB's woes as likely to spread. to the entire banking system. Morgan Stanley Bank said in a report to clients that SVB's problems are very rare.