Regulator FDIC closed the doors on Silicon Valley Bank (SVB) on Friday. It is the largest bank to fail in the United States in over a decade. The bank was struggling with a huge loss of confidence, as a result of which it was no longer possible to stop the flow of customer funds.
The first nail in SVB’s coffin was struck on Wednesday. The bank then announced that it would issue $2.25 billion (€2.1 billion) in new shares. This was necessary due to a significant loss of $1.8 billion in the investment portfolio.
Then Greg Baker, CEO of the parent holding company SVB Financial, called on his clients to remain calm and support the bank, “because we have supported our clients for 40 years.” But that call fell on deaf ears.
Several influential venture capitalists, including tech billionaire Peter Thiel’s Founders Fund, have advised their clients to withdraw money from SVB. This set off a run of banks, and a scramble for bank balances because savers feared their money was no longer safe.
Investors also panicked. The stake in the parent company that owns SVB Financial fell 60 percent Thursday to the lowest level since September 2016. The Silicon Valley bank was valued at $40 billion last year.
