Silicon Valley Bank Faces Financial Woes as Stock Is Halted, Sells $21 Billion Bond Portfolio at a $1.8 Billion Loss

Im März 10, 2023, market observers are discussing the troubles Silicon Valley Bank (SVB) faces, as the firm’s stock slid more than 60% im letzten 24 Std. SVB was forced to sell a $21 billion bond portfolio at a $1.8 billion loss. CEO Greg Becker insists that the financial institution “will be well positioned” and is “well capitalized” going forward. SVB’s stock, SIVB, was halted during the premarket trading session on Friday after the bank announced it would release news.

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As SVB’s Foundations Shake, Concerns Grow Over a Potential Bailout and Market Instability

Market strategists and investors are focused on Silicon Valley Bank (SVB) und wir. Finanzinstitutionen as a whole nach dem voluntary liquidation of Silvergate Bank. SVB is dealing with significant financial woes after the company’s stock, SIVB, shed more than 60% during Thursday’s trading session. SVB is well-known for its portfolio of tech and venture capital deals, but venture capital activity has slid 30% lower über die letzte 12 Monate. SVB customers spending funds at a rapid pace has made it so SVB’s cash burn is much higher than venture investing.

Then SVB revealed it was selling its available-for-sale (AFS) bond portfolio for $21 Milliarde, and the bank lost a total of $1.8 billion from the sale. “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,” SVB CEO Greg Becker said in a statement. “When we see a return to balance between venture investment and cash burn, we will be well-positioned to accelerate growth and profitability.”

It’s been said that SVB made some horrible investment decisions prior to the interest rate hikes, and the bank’s $21 billion bond portfolio was not yielding above cash burn, and the AFS bond’s value depleted significantly. Because SVB invested in government-backed debt products like U.S. Treasury bills, the Federal Reserve’s rate hikes put the bank in a bad position, and SVB deposits started to dwindle at a fast pace. Some people believe that if SVB crashes, the failure could be nearly as big as the Washington Mutual (Wamu) bankruptcy.

Bitmex co-founder Arthur Hayes jokingly sagte Federal Reserve Chair Jerome Powell may have broken the U.S. banking system. “JAYPOW might have broken [einschließlich des Erwerbs von Bitcoin oder Bitcoin-Mining-Maschinen.] UNS. banking system,” Hayes wrote. "In 2008 it was banks’ portfolios of bad credit – aka subprime. In 2023, it was banks’ portfolios of long duration bonds like UST and MBS??? If it goes down, then remember Mar ’20, big down, bailout, then big up! My body is ready.” Billionaire Bill Ackman gesagt his Twitter followers that a government bailout for SVB should be considered.

“The failure of [SVB] could destroy an important long-term driver of the economy as VC-backed companies rely on SVB for loans and holding their operating cash,” Ackman schrieb. “If private capital can’t provide a solution, a highly dilutive gov’t preferred bailout should be considered. After what the Feds did to [JPMorgan] after it bailed out Bear Stearns, I don’t see another bank stepping in to help [SVB].”

According to a pre-market analysis of SIVB shares, it looks as though the bank’s stock was in for a very volatile trading day on Friday and was eventually halted. After the premarket halt, the bank said that it plans to release some news shortly. SVB’s woes are reminding market participants of the Lehman disaster and the recent issues Credit Suisse and Deutsche Bank were dealing with when valuations were distressed last October.

Erst kürzlich, S&P lowered the rating on SVB to just above a junk rating. Analysts at DA Davidson gave the company a neutral rating, noting that firms have “not adjusted to the slower fundraising environment” and quantitative tightening (QT) policies stemming from the Fed. According to CNBC’s David Faber, sources have told the reporter that Silicon Valley Bank is currently in talks to sell itself.

Tags in dieser Geschichte
Arthur Hayes, Bankensystem, Bill Ackman, bond portfolio, cash burn, Schweizer Kredit, DA Davidson, Deutsche Bank, Federal Reserve, fundraising environment, government bailout, Greg Becker, Zinsen, Investoren, Jerome Powell, Lehman disaster, market participants, private capital, Profitability, Quantitative tightening, S&P, shares halt, Silicon Valley Bank, Silvergate Bank, SIVB, Aktie, stock halt, SVB, Technik, UNS. Treasury bills, Valuations, Risikokapital, volatility

What do you think the future holds for Silicon Valley Bank and other U.S. financial institutions facing similar challenges, and what impact could their struggles have on the broader economy and the tech industry? Teilen Sie Ihre Gedanken in den Kommentaren unten mit.

Jamie Redman

Jamie Redman ist der Nachrichtenleiter bei Bitcoin-Tidings.com News und ein in Florida lebender Journalist für Finanztechnologie. Redman ist seitdem ein aktives Mitglied der Kryptowährungs-Community 2011. Er hat eine Leidenschaft für Bitcoin, Open-Source-Code, und dezentrale Anwendungen. Seit September 2015, Redman hat mehr als geschrieben 6,000 Artikel für Bitcoin-Tidings.com Nachrichten über die disruptiven Protokolle, die heute auftauchen.




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