Fears of a broad financial contagion spread on Friday after tech lender Silicon Valley Bank set off alarm bells over liquidity concerns — sparking share losses across the banking sector worth some $52 billion on Thursday. According to the NYP, On Friday, the Federal Deposit Insurance Corp. said regulators have shut the bank down to protect insured deposits.
That was after the bank’s parent SVB Financial had reportedly tapped outside advisers to facilitate a potential sale. “Large financial institutions” were exploring a potential acquisition of SVB Financial, CNBC reported, citing sources familiar with the matter.
Earlier in the morning, building managers at Silicon Valley Bank’s Manhattan branch reportedly called the police after a group of tech founders showed up and attempted to pull out their cash.
SVB shares — which plunged 60% yesterday after the company’s CEO begged investors to “stay calm” and not “panic” over liquidity concerns — remained halted as of midday Friday after plunging 47% in premarket trading early Friday.
Peter Thiel’s venture capital firm Founders Firm advised clients to withdraw their deposits from Silicon Valley Bank — despite the fact the lender has been a mainstay for tech startups for decades, according to Bloomberg News.
Bill Ackman, the billionaire hedge fund manager, called on the US government to step in and bail out Silicon Valley Bank. Michael Burry, the eccentric investor featured in the 2015 film “The Big Short,” warned: “It is possible today we found our Enron.”
Shares of Silicon Valley Bank’s parent company, SVB Financial Group, nosedived by 60% on Thursday evening, wiping out more than $80 billion from its market capitalization.
The company’s stock was down another 45% in pre-market trading on Friday — dragging down the share price of several other publicly traded banking giants.
