SVB Financial CEO asks Silicon Valley Bank clients to 'stay calm' as shares sink
BNN Bloomberg
Unease is spreading across the financial world as concerns about the stability of Silicon Valley Bank prompt prominent venture capitalists including Peter Thiel’s Founders Fund to advise startups to withdraw their money.
The turmoil followed a surprise announcement from Santa Clara, California-based SVB that it was issuing US$2.25 billion of shares to bolster its capital position after a significant loss on its investment portfolio. The stock plunged 63 per cent in premarket trading in New York on Friday before trading in the bank’s parent was halted with news pending. They declined 60 per cent the day before. Its bonds posted record declines, igniting a broad selloff in bank shares around the world.
In the US, Thursday was the worst day for the KBW Bank Index since June 2020, as its members shed more than $90 billion of value. The biggest banks in Europe lost more than $40 billion from their market capitalizations on Friday.
Founders Fund asked its portfolio companies to move their money out of SVB, according to a person familiar with the matter who asked not to be identified discussing private information. Coatue Management, Union Square Ventures and Founder Collective also advised startups to pull cash, people with knowledge of the matter said. Canaan, another major VC firm, told firms it invested in to remove funds on an as-needed basis, according to another person.
