Shares of SVB Financial Group, known as Silicon Valley Bank, tumbled for a second day Friday before the bank was shut down by regulators. The failure raised fears more banks would incur heavy losses on their bond portfolios.
SVB’s CEO, Greg Becker, held a call with clients Thursday afternoon to calm their fears, CNBC learned, after a 60% tumble in the stock that day. The shares were down another 62% in premarket trading Friday before they were halted for pending news. They did not open for trading with the market at 9:30 a.m. ET.
Midday Friday, regulators shut down the bank and said the FDIC would protect insured deposits.
CNBC’s David Faber reported earlier the bank was in talks to sell itself after attempts to raise capital failed, citing sources familiar. However, rapid deposit outflows outpaced the sale process, which made it difficult for any buyer to do a realistic assessment, Faber reported.
The SPDR S&P Regional Banking ETF, which tumbled 8% on Thursday, fell another 4% on Friday as news of SVB’s failure hit. Signature Bank, which is known to cater to the crypto sector, declined 22% following a 12% tumble Thursday. First Republic Bank fell 15% following a 17% slide Thursday. PacWest Bancorp lost 38%. Many of these bank shares were halted repeatedly for volatility on Friday.
Major banks outperformed regional banks. Bank of America lost 0.9%. The Financial Select SPDR Fund dropped 1.8%, following a 4% decline Thursday.
“Current pressures facing SIVB are highly idiosyncratic and should not be viewed as a read-across to other banks,” wrote analysts Manan Gosalia and Betsy Graseck with Morgan Stanley in a note Friday.
Negative shock
Concern among founders and venture capital investors spiked earlier this week after Silicon Valley Bank surprised the market by announcing late Wednesday it needed to raise $2.25 billion in stock. The bank had been forced to sell all of its available-for-sale bonds at a $1.8 billion loss as its startup clients withdrew deposits, it…
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