American Silicon Valley Bank customers are trying to withdraw money from their accounts in bulk, some are already experiencing difficulties with transfers, TechCrunch reports citing sources.
Venture capital funds advised new portfolio companies to withdraw funds from SVB due to concerns about the bank’s financial stability.
On March 9, SVB Financial, the parent company of Silicon Valley Bank, announced an emergency sale of $21 billion in bonds from its portfolio, resulting in a loss of $1.8 billion.
The finance company also announced plans to float $2.25 billion in shares to raise funds to cover losses.
“Dozens” of VCs have advised their portfolio companies to move their assets out of the bank, sources told TechCrunch, while others are pushing for founders to at least diversify their capital. However, some of them believe that it is too early to panic. All this led to SVB facing the volatility of deposit resources.
The cost of SVB Financial Group securities fell 61% last Thursday.
- Silicon Valley Bank is included in the list of the largest banks in the US, most of its clients are start-ups that received financing from venture investors (the bank helped finance more than 30 thousand start-ups).
- The bank now faces serious challenges due to a drop in risk financing, problems with its clients and losses on investments it made during a period of low interest rates.
Business angel Vlad Tropko believes that Silicon Valley Bank “will fail in the next few days if MENA investors or the state don’t help them.”
“It is a rare case when Russian-speaking founders can sleep easy at such a time: their accounts at SVB have been closed for a long time, and they have no risks for this bank. This event reminds once again: don’t keep all your eggs in one basket, regardless of whether you are a start-up, a “physicist” or a corporation,” Tropko said on his Facebook page*.
Author:
anastasia mariana
Source: RB
I am a professional journalist and content creator with extensive experience writing for news websites. I currently work as an author at Gadget Onus, where I specialize in covering hot news topics. My written pieces have been published on some of the biggest media outlets around the world, including The Guardian and BBC News.
