Shares of Silicon Valley Bank halted with news pending, down 63% premarket (Updated) | Forexlive
Silicon Valley Bank put a fright into the market yesterday as it had to sell stock to raise capital in order to plug a hole in the balance sheet due to Treasury liquidation sales.
The bank is obviously having a very bad week, falling 89% and with Peter Thiel and others telling clients (heavily in venture capital) to pull funds.
If the news is that it’s been taken over then risk assets will take the news positively. If the government has to step in to wind it down, I also think that will be taken positively but I’m less confident. Anything disorderly will be a problem.
CNBC’s David Faber reports that yesterday’s capital raise failed, which isn’t a big surprise given where it’s trading in the pre-market. He also said that the company has hired advisors to sell itself and noted that ‘large financial institutions’ are ‘taking a look’.
The equity value of this bank is down to something like $3 billion and there are around $220 billion in deposits. It’s obviously a firesale at this point but even if it went for $1, the market would like that. I don’t imagine it will be a long wait.
/us dollar