SVB Financial Group in talks for sale; crisis triggers global banking rout

SVB Financial Group was exploring options, including a sale, after efforts to raise capital through a stock sale failed, sources said on Friday, as a crisis at the tech-heavy lender rippled through global markets and hit banking stocks. 

Shares of SVB were halted on Friday after tumbling 66 per cent earlier in premarket trading. SVB, which does business as Silicon Valley Bank, was not immediately available for comment. 

The brutal rout in the lender’s stock, which began on Thursday, spilled over into other US and European banks, with the episode spreading concern about hidden risks in the sector and its vulnerability to the rising cost of money. 

The S&P 500 banks index dropped 4.2 per cent on Friday after a 6.6 per cent decline on Thursday, while the KBW Regional Banking index was down 5.3 per cent. 

Europe’s STOXX banking index fell almost 5 per cent, set for its biggest one-day slide since March 2022, with declines for most major lenders, including HSBC, down 6.1 per cent, and Deutsche Bank, down 9.2 per cent.

The problems at SVB underscore how a campaign by the US Federal Reserve and other central banks to fight inflation by ending the era of cheap money is exposing vulnerabilities in the market. 

The crisis at SVB started earlier this week when the bank, which lends heavily to tech startups, launched a share sale to shore up its balance sheet after selling a portfolio consisting mostly of US Treasuries at a loss. 

Work from home: SVB to staff

SVB Financial Group told its employees in a memo on Friday that they should work from home until further notice. 

“SVB is undergoing a series of conversations that have not been concluded yet to determine next steps for the company,”the bank said in a memo seen by Reuters. SVB did not immediately respond to a request for comment. 

The trail of crisis

SVB Financial Group shares were halted on Friday after tumbling 66 per cent in pre-market trading

The S&P 500 banks index dropped 4.2 per cent on Friday after a 6.6 per cent decline on Thursday 

Europe’s STOXX banking index fell almost 5 per cent set for its biggest one-day slide since March 2022