SVB Financial Group, the Santa Clara-based lender, is reportedly in talks to sell itself after attempts to raise capital failed. This comes after the company's stock tumbled 60% on Thursday and another 63% in early trading on Friday, causing trading to be halted. According to CNBC, large financial institutions are considering purchasing the company.
SVB had previously stated that it wouldn't significantly restructure its balance sheet, but on Wednesday the company announced that it would issue $2.25 billion of shares and recorded a $1.8 billion loss on the sale of a large part of its available-for-sale securities. The bank took these steps to shore up capital after losses on its securities portfolio and a slowdown in funding at the venture capital-backed firms it serves.
Despite the efforts of Silicon Valley Bank executives to reassure clients, prominent venture capitalists such as Peter Thiel's Founders Fund, Coatue Management, Union Square Ventures, and Founder Collective advised startups to withdraw their money from the bank. Some customers even complained that they were unable to do so on Thursday.
SVB rose to prominence by serving startups and venture capitalists, and at the end of last year was the 16th-largest US bank. However, the Federal Reserve's aggressive push to raise interest rates has dampened venture funding and led to a decline in valuations. This, combined with the bank's recent losses, has caused a stark turnaround for the once-prominent lender.
