U.S. tech bank SVB shares plunge 60%

Quotes of the American Silicon Valley Bank (SVB Financial Group), working with companies in the technology sector, yesterday collapsed by 60% after the bank unexpectedly announced an emergency capital increase. Last Wednesday, SVB held an additional share issue for $1.75 billion “to strengthen its balance sheet.” In its investor prospectus, the bank explained that it needed to recover $1.8 billion in losses it incurred as a result of the sale of part of its asset portfolio.

The troubles of this bank, which serves many American technology startups, have alarmed investors. They suspected that SVB’s troubles were much wider, so they began to sell its shares, which eventually fell in price by 60%. Adding to the alarm was the fact that a day earlier, Silvergate Capital Corporation announced on the liquidation of its cryptocurrency bank Silvergate. Silvergate Bank is one of the largest cryptocurrency banks in the US, along with Signature Bank, a partner of the Binance US cryptocurrency exchange.

Against the backdrop of falling SVB shares, quotes of other American banks also began to decline – this led to a decrease in the entire S&P 500 Financials index by 4.1%, which was a record drop for it since mid-2020. “Silicon Valley Bank is just the tip of the iceberg,” he said in an interview. Bloomberg Christopher Whalen, head of consulting company Whalen Global Advisors.— I’m not worried about the big guys (big banks.— “b”). But for those who are smaller, it will not be easy. Many of them, too, may need to urgently raise additional capital.”

Evgeniy Khvostik