It took only 48 hours for Silicon Valley Bank to become the nation’s second-largest bank failure.
The company’s problems started on Wednesday when the financial institution informed investors that it needed to generate $2.25 billion to cover an unexpected decline in deposits and improve its balance sheet and overall financial position.
In a letter to shareholders, the bank’s parent company, SVB Financial Group, reported that the rising-rate environment and slowing economy applied pressure to public and private markets. It further explained that clients endured enormous cash burn levels (net decrease in cash over time).
This revelation erased approximately $10 billion in market capitalization in a single trading session, as the stock tanked 65 percent to $106. In after-hours trading on Friday, shares plunged another 60 percent. SVB Financial bonds also cratered to 31 cents on the dollar….