The recent decline of SVB has sent shockwaves across financial markets around the world. Pipa News

The recent decline of SVB has sent shockwaves across financial markets around the world.

Silicon Valley bank crisis: SVB’s recent fall has shocked financial markets around the world

Shares in Silicon Valley Bank (SVB), a major lender to technology startups, fell as investors moved to withdraw their deposits, according to a BBC report.

The decline came after the bank announced a $1.75 billion share sale to help shore up its finances. As the BBC reports, shares of banks around the world plummeted – the four largest US banks, including JP Morgan and Wells Fargo, lost more than $50 billion in market value.

As the BBC reports, one venture capitalist said the day’s events were “wild” and “brutal”. On Friday, the shares of Asian banks were also trading with a decline.

Shares in SVB saw their biggest one-day drop on record as they fell more than 60 percent and fell a further 20 percent in after-hours trading, the BBC reported.

The share sale began after the firm lost about $1.8 billion when it offloaded a portfolio of assets, primarily US Treasuries. But what is more worrying for the bank is that some startups with deposits have been advised to withdraw the funds.

Venture Capitalists’ Responses

Hannah Chlkowski, founder of Blank Ventures, a fund that invests in fintech, told the BBC the situation was “wild”. She is advising companies in her portfolio to withdraw funds.

“It’s crazy how it got resolved like this…Interestingly it is the most startup friendly bank and has been so supportive of startups through covid. Now VCs are asking their portfolio companies to pull their funds are,” she said.

“It’s cruel,” she said. An important lender to early-stage businesses, SVB is the banking partner for nearly half of US venture-backed technology and healthcare companies that listed on stock exchanges last year, the BBC reports.

In the broader market, there were concerns about the value of bonds held by banks as rising interest rates made those bonds less valuable.

The BBC reported that central banks around the world – including the US Federal Reserve and the Bank of England – have sharply raised interest rates as they try to curb inflation.

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