Saturday, June 28, 2025

Silicon Valley Bank: Shares Plummet 70%, Clients Reportedly Told Wires Are “Backed Up”

Investors sold shares of SVB Financial Group (Nasdaq: SIVB) and other US banks after the tech-focused lender reported it lost about $2 billion selling assets due to a larger-than-expected decrease in deposits.

SVB announced late Wednesday that it will book a $1.8 billion after-tax loss on investment transactions and seek to raise $2.25 billion through the sale of a mix of common and preferred stock.

In 2021, the bank’s assets and deposits nearly increased, with SVB investing heavily in US Treasury bills and other government-backed debt products. The Federal Reserve soon began hiking interest rates. This hammered the tech startups and venture capital firms that Silicon Valley Bank services, causing a faster-than-expected decrease in deposits that is still gaining traction.

Customers’ “cash burn” increased in February, causing deposits to fall short of expectations, according to CEO Greg Becker in a letter to investors. When combined with rising capital costs, this puts pressure on margins and income, he says.

In response, SVB stated that it plans to raise more than $2 billion, with $500 million coming from private equity company General Atlantic and $1.75 billion coming from a public equity offering.

In addition, the corporation liquidated the majority of its securities portfolio, collecting $21 billion, which it intends to reinvest in shorter-term debt while tripling its term borrowing to $30 billion.

“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,” Becker said. “When we see a return to balance between venture investment and cash burn – we will be well positioned to accelerate growth and profitability.”

Becker clarified that SVB is “well capitalised”.

SVB also released updated outlook estimates, predicting a “mid-thirties” percentage reduction in net interest income this year, up from the “high teens” drop predicted seven weeks ago.

It now expects net interest margins to decrease to 1.45-1.55% this year, down from 1.75-1.85% in January.

Compounding the concerns, The Information reported that at least four SVB clients have been informed wire transfers may be delayed, and the bank’s support phone lines were recently unavailable. Some customers reported difficulties accessing the company’s website to examine their account details and make transfers.

One founder who spoke with an SVB customer service representative Thursday afternoon claimed the bank’s “systems are down, wires are backed up, and there’s no way for me to login right now or for them to help me” wire money over the phone.

Several wires were successfully transmitted, according to other clients, throughout the day. Meanwhile, other banks such as JPMorgan attempted to persuade some SVB customers to transfer their funds.

SVB shares plunge over 60% on the day following the news, with a further 19% decline in after-hours trading.

The bank took the industry along in their decline. The four largest banks in the United States lost $52 billion in market value on Thursday. The KBW Nasdaq Bank Index fell the most since the pandemic roiled markets nearly three years ago.

Banks incur no losses on their bond portfolios if they can keep them until maturity. But, if they are forced to sell the bonds at a loss in order to raise cash, accounting regulations require them to include the realized losses in their earnings.


Information for this briefing was found via The Wall Street Journal, Reuters, The Information, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

Why This “Unknown Metal” Is Suddenly Essential For Defense & Tech | Antimony Resources

Tudor Gold x American Creek: Consolidating A Massive Gold Project

Aura Minerals: The Era Dorada Underground PEA

Recommended

Goliath Resources Expands 2025 Drill Program To 60,000 Metres

Emerita Resources Formally Appeals Administrative Ruling On Aznalcóllar Related To 2017 Complaint 

Related News

Banksplaining Part 2 – Capital Requirements

On the last episode, we learned about how a 3.4% move in interest rates caused...

Thursday, March 23, 2023, 03:28:00 PM

Silicon Valley Bank Shut Down By California Regulator

It appears we’ve reached the end of the line for Silicon Valley Bank (NASDAQ: SIVB),...

Friday, March 10, 2023, 11:50:45 AM

SVB Financial Group Officially Files for Bankruptcy

SVB Financial (NASDAQ: SIVB), the parent company behind the infamous Silicon Valley Bank that failed...

Friday, March 17, 2023, 10:33:37 AM

US Bailout of SVB Will Include Chinese Communist Party-Linked Depositors

The federal effort to make depositors of the collapsed Silicon Valley Bank whole will include...

Friday, March 17, 2023, 02:18:00 PM

Coinbase Halts Conversions Of USDC To USD Until Monday As Circle Reveals $3.3 Billion Exposure To SVB

Contagion from the shuttering of Silicon Valley Bank (NASDAQ: SIVB) continues to hit the markets,...

Saturday, March 11, 2023, 12:20:06 AM