Events snowballed after Silicon Valley Bank announced a share sale to shore up its finances, following a significant loss on its portfolio
Santa Clara-based SVB’s ordeal began after its parent company, SVB Financial Group, announced that it sold $21 billion of securities from its portfolio and said it was holding a $2.25 billion share sale to shore up finances.
SVB's stock plunged 60% Thursday and its bonds posted record declines. SVB Chief Executive Officer Greg Becker held a conference call with the bank’s clients, including venture capital investors, urging them to “stay calm" in a bid to avoid a run on the bank.
The worst-case scenario for any bank is that it ends up with too little cash to operate or suffers enough losses to erode its capital, prompting regulators to sell the bank to a stronger rival or wind it down. But SVB's stock sale should help to prevent that. Time will tell.