Silicon Valley Bank Financial in Talks To Sell Itself After Attempts To Raise Capital Failed (cnbc.com) 23
SVB Financial, parent of Silicon Valley Bank, is in talks to sell itself, sources told CNBC's David Faber. From the report: Attempts by the bank to raise capital have failed, the sources said, and the bank has hired advisors to explore a potential sale. Large financial institutions are looking at a potential purchase of SVB. Shares of the bank fell 60% on Thursday after SVB announced a plan Wednesday evening to raise more than $2 billion in capital. The stock fell another 60% in premarket trading Friday before being halted for pending news. Under the terms of a plan released Wednesday, SVB was looking to sell $1.25 billion in common stock and another $500 million of convertible preferred shares. SVB also announced a deal with investment firm General Atlantic to sell $500 million of common stock, though that agreement was contingent on the closing of the other common stock offering, according to a securities filing. SVB is a major bank for venture-back companies, and cited cash burn from clients as one reason it was looking to raise additional capital.
Open a branch in the metaverse (Score:4, Funny)
The begging has already started (Score:5, Insightful)
Once again, Wall Street is coming hat in hand begging those who pay taxes to save private industry. Bill Ackman, the guy who is so gung ho on crypto, stated [marketwatch.com]:
“The failure of Silicon Valley Bank could destroy an important long-term driver of the economy as VC-backed companies rely on SVB for loans and holding their operating cash. If private capital can’t provide a solution, a highly dilutive government preferred bailout should be considered.”
Pardon my French, but fuck you, Bill Ackman. Put up your own money. You have enough [celebritynetworth.com]. If you can't do it yourself, get those other grifters to chip in a few hundred million each.
If private industry can't survive without the taxpayers continually footing the bill, it should be allowed to die.
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I agree with the sentiment. From what I heard, the problem is this bank took it's depositors money and bought a 100B or so in T-bills. Normally a pretty safe thing to do. Except they did that a year or two ago, before the interest rate hikes started - buying 30-year T-bills paying 0.00001% interest. Idiots. Locking up capital, for 30 years, for no gain. They should have known better.
Now times are tough, and all their depositors - struggling startups - were withdrawing their deposits. Ruh-ro! So the
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And thankfully, does not seem like it's going to spiral out much from this one bank. So, there is that.
There are several other banks being watched [marketwatch.com] as fallout from this incompetence trickles down (see what I did there?).
Based on Yellen's remarks, you can be sure the taxpayers will be footing the bill in the near future.
Re:The begging has already started (Score:5, Insightful)
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I say let the FDIC insurance do it's job for customers (oh this is a bank for billionaires - well tough shit you only get 250k), and also let the FDIC do what it is supposed to do - take over the bank and divide up the client accounts with other banks willing to take them on, and finally let the remaining carcass for the debtors to pick over.
This is exactly what's happening. News broke a few minutes ago the California Department of Financial Protection closed the bank [marketwatch.com] with the FDIC as receiver. All insured depositers of Silicon Valley Bank will have access to their deposits no later than Monday.
It is guaranteed more banks will be involved since they lent money to or backstopped SVB.
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T-Bills are by definition 1 year or less in duration.
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He probably meant Bonds, [investopedia.com] not Bills.
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Maybe, or he's making up the duration ;) ... no firm reference I can see.
I doubt they did 30 yrs
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Yes, I did mean Bonds. Thanks for the info guys - I always thought T-Bill was slang for a Treasury Bond, not two entirely different things. 8-)
Re: The begging has already started (Score:2)
They may have made a bad interest bet, but I can assure you they never intended to keep the treasuries for 30 years. Iâ(TM)ll turn about your comment: are you a moron? Thatâ(TM)s not how banks invest in government securities, regardless of the nominal maturity date.
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I like the $7M philanthropy part in its bio. At my scale, it's me giving $100 or $200, lol.Plus giving money to its own foundation. Billionaires are awesome.
At my scale that's me saying "Times are tough for everyone." to beggars in the street.
Track who they talk to (Score:4, Interesting)
It will be an great way to track the next failure.
So it has come to this (Score:2)
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Let them die (Score:5, Informative)
There are much more reasonable and sane sources of funding. If these clowns blew up their balance sheet, they deserve to perish.
The news story I'm looking for (Score:3)
A list of the start-ups who still had all their money at SVB. They will get access to $250,000 (The insured part) on Monday. After that, it is a long wait for whatever is left over.
Companies in SV can burn $250,000 awfully fast. Hopefully, desperate CEO/founders know not to reach for their personal Amex too quickly. Will payroll companies even accept Amex for payroll? I don't think ADP will. (You can't mix personal and business funds without the proper paperwork in place.) Rent and some other payables can be late. Payroll generally can not.
Kinda curious where these tech companies will go. Other banks might not want a new client who just lost all their cash until they see proof of new funding or sale of liquid assets. Banks want to see balance/income sheets.