Silicon Valley Bank shares plunge, Ackman advises government bailout
Shares of SVB has lost more than 60% of their value this week
Silicon Valley Bank crash sparks big bank contagion fears
SlateStone Wealth chief market strategist Kenny Polcari analyzes the SVB meltdown, arguing banking stocks got 'slaughtered,' but contagion fears are 'way overdone.'
Silicon Valley Bank shares remained halted after the FDIC shut the financial institution down on Friday.
The bank, which caters to the venture capital community, is in the middle of a liquidity crisis after announcing plans for a $1.25 billion stock sale with little interest.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SIVB | NO DATA AVAILABLE | - | - | - |
| JPM | JPMORGAN CHASE & CO. | 243.12 | +2.31 | +0.96% |
| WFC | WELLS FARGO & CO. | 74.80 | +1.23 | +1.67% |
| C | CITIGROUP INC. | 68.88 | +0.60 | +0.88% |
| BAC | BANK OF AMERICA CORP. | 46.77 | +0.70 | +1.53% |
The stock has lost over 60% of its value this week alone. Other bank stocks were volatile on Friday.
FOX Business' Charlie Gasparino reported the firm is shopping itself, but any sale would need approval from the Federal Reserve which narrows the list of potential suitors.
CNBC was first to report the bank was exploring a sale.
SVB Silicon Valley Bank
Billionaire hedge fund manager Bill Ackman floated the idea of a government bailout for the bank in a tweet saying, "The failure of @SVB_Financial could destroy an important long-term driver of the economy as VC-backed companies rely on SVB for loans and holding their operating cash. If private capital can’t provide a solution, a highly dilutive gov’t preferred bailout should be considered."
Jitters spilled into the cryptocurrency market; bitcoin fell below the $20,000 level as investors continue to shed risky assets.
FEBRUARY JOBS REPORT STRONGER-THAN-EXPECTED
Earlier this week, SVB disclosed mounting losses.
"While VC deployment has tracked our expectations, client cash burn has remained elevated and increased further in February, resulting in lower deposits than forecasted. The related shift in our funding mix to more, higher-cost deposits and short-term borrowings, coupled with higher interest rates, continues to pressure NII and NIM," CEO Greg Becker wrote in a letter to investors.
Becker, on a call Thursday, reportedly told the venture capital community to "stay calm," The Information reported. FOX Business’ inquiries to SVB were not immediately returned.
Silicon Valley Bank CEO Greg Becker (Company)
The move comes after Silvergate Capital, heavily exposed to digital assets, announced plans to liquidate.
SILVERGATE ANNOUNCES PLANS TO WIND DOWN
Silvergate shares have lost 84% of their value this year.
BITCOIN SLIDES ON SILVERGATE FALLOUT
In Wednesday's announcement the company stated: "In light of recent industry and regulatory developments, Silvergate believes that an orderly wind down of bank operations and a voluntary liquidation of the bank is the best path forward. The Bank’s wind down and liquidation plan includes full repayment of all deposits. The Company is also considering how best to resolve claims and preserve the residual value of its assets, including its proprietary technology and tax assets."
SAM BANKMAN-FRIED HIT WITH FRESH INDICTMENT, MORE CHARGES
The implosion of Sam Bankman-Fried's FTX continues to send ripples through the crypto industry and firms with exposure.
Sam Bankman-Fried, co-founder of FTX Cryptocurrency Derivatives Exchange, arrives at court in New York, on Jan. 3, 2023. (Photographer: Stephanie Keith/Bloomberg via Getty Images / Getty Images)
Bankman-Fried is currently under house arrest awaiting trial for fraud and money laundering with billions of customer funds unaccounted for.