How Silicon Valley Bank Sparked Global Financial Panic

Days after the Moody’s call, the bank said in a March 3 filing that it would be able to “sustain overall healthy client fund levels, despite balance sheet pressures from declining deposits, elevated client cash burn and overall market environment challenges.”

Last Wednesday, the bank issued a news release after the market closed, saying it had sold $21 billion of its debt at a loss of $1.8 billion and was looking to raise $2.25 billion in new equity. The investment firm General Atlantic said it would buy $500 million of the bank’s stock.

That afternoon, and on Thursday, Goldman bankers started pitching investors on buying SVB shares. The announcement had spooked investors, who worried that the bank was in deeper trouble than it was letting on. When the markets opened on Thursday, the bank’s shares fell steeply.

Silicon Valley woke up to a blizzard of text messages, phone calls and Twitter posts about the bank’s mounting woes. Clients of the bank rushed to pull deposits. On Thursday alone, they withdrew $42 billion.

Late morning Pacific time, Mr. Becker got on a webinar with hundreds of investors and lawyers. The bank had plenty of liquidity, he said, but he ended the call with one caveat: If people began telling one another that SVB was in trouble, it would pose a challenge, according to people briefed on the call.

Article source: https://www.nytimes.com/2023/03/14/business/silicon-valley-bank-gregory-becker.html