The financial world woke up to the shocking news of Silicon Valley Bank being shut down on Friday. The collapse of the 16th largest lender in the United States is considered as the biggest bank failure since the Washington Mutual fell more than a decade ago.
US treasury secretary Janet Yellen said that the Biden administration will not bail out the closed bank but is working to help the depositors concerned about their money. The Federal Deposit Insurance Corporation insures deposits up to $250,000 ( ₹2.04 crore), but most of the companies and the rich who used the bank had more than that amount in their bank.
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Here’s a brief timeline of how the bank collapsed in a matter of just 48 hours.
March 8: The bank sold about $21 billion of securities from its portfolio with a plan to reinvest the proceeds, which will result in an after-tax loss of $1.8 billion for the first quarter. The bank also announced offerings for $1.25 billion of its common stock and $500 million of securities that represent convertible preferred shares, Bloomberg reported.
March 9: The SVB shares plunged by 41 per cent, their biggest decline since 1998. The slump in their shares came after SVB announced that it had sold all of the available-for-sale securities in its portfolio and updated its forecast for the year to include a sharper decline in net interest income.
The SVB Financial Group’s CEO Greg Becker advised clients to stay calm amid concern about the lender’s financial position.
March 10: Prominent venture capitalists advised portfolio businesses to withdraw their money from the Silicon Valley Bank. This on a day when the shares of SVB were halted after a sharp sell-off in premarket trading.
The stock was trading at $63.99 before the bell and was on course to open at its lowest in more than a decade, if current losses held.
US treasury secretary Janet Yellen said, “There are recent developments that concern a few banks that I am monitoring very carefully”.
March 10: California regulator shut Silicon Valley Bank and appointed the Federal Deposit Insurance Corporation as receiver, Reuters reported. This day after the shares of the bank were halted after tumbling 66 per cent in premarket trading.