Photo Credit: Source: SVB Logo

SVB Crisis Explained: All you need to know

Silicon Valley Bank (SVB) has been trending in the news as it lost over 60% of its share price in just under 24 hours.

SVB Share Price Plummets

At the time of writing, the share price of Silicon Valley Bank (SVB) has dropped by more than 60% in a period of just 24 hours, as a result of some major public announcements by the bank.

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SVB Loses $1.8 Billion In Sale Of Securities

The first domino fell when SVB announced that they have lost around $1.8 Billion after the sale of their $21 Billion worth of US treasuries and securities, due to rising interest rates.

Photo Credit: In this photo illustration the Silicon Valley Bank (SVB) logo is seen displayed on a smartphone. Photographer: Rafael Henrique/SOPA Images/LightRocket/Getty Images

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SVB’s Deposits Drying Up

SVB was already facing problems as the majority of their tech-based venture capitalist deposits were drying up and being withdrawn, leading to liquidity issues, given current economic conditions.

Photo Credit: Source: Wance Paleri on Unsplash

SVB Decides To Raise Capital

As a result, SVB decided to solve their liquidity issues and recover the losses by raising capital via selling its stocks worth $2.5 Billion. However, customers and the market perceived this as a sign of the bank’s financial troubles.

Photo Credit: Amelia Spink on Unsplash

Silvergate Bank Also Collapses

The announcement could not have come at a worse time, as another cypto/tech bank, Silvergate had announced they would be shutting down due to losses. The news only exacerbated the already tattered reputation of SVB.

Photo Credit: The Silvergate Bank headquarters in La Jolla, California, US, on Thursday, March 9, 2023. Silvergate Capital Corp. plans to wind down operations and liquidate its bank after the crypto industrys meltdown sapped the company's financial strength, sending shares plunging.

Customers Panic

As a consequence, many of SVB’s customers started withdrawing stored funds, worsening their liquidity and public image issues. Subsequently, the bank’s stock price also crashed.

SVB Trying To Stay Afloat

Currently, SVB is looking into securing some funding and investments so they can tide over this rough period and is urging customers and existing shareholders to remain calm.

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