There have been issues revolving around the conditions of the technological bank – Silicon Valley Bank. The bank provides services to cryptocurrency platforms, for example, a16z and Sequoia.
People have been scared and frustrated about yet another bank in the US after recent news about SVB.
Apparently, Silicon Valley Bank revealed a huge amount of stocks and commodities being sold in order to gain more capital.
Although, a few crypto investors might be confused and worried about the ongoings of the bank and technological startup.
This is especially due to Silvergate – a cryptocurrency bank – being closed a day before this news was revealed.
Because of this, Silicon Valley Bank’s shares experienced a decrease of more than 60%, and the bank lost $80B worth of the bank’s shares.
Silicon Valley Bank is ranked amongst one of the most prominent banks in the US and offers services to crypto businesses like Sequoia, etc.
SVB Sells Securities at Loss; CEO Reassures Investors
During the month of March, a statement was revealed regarding the financial health of the bank.
It was mentioned that the bank had sold around $21B of its securities for a loss of $1.8B in order to fix its balances.
The bank gained around $500M from the business, General Atlantic. By selling its shares, they want to gain $1.75B more, totaling $2.25B.
As per the bank, the sale was done for several reasons including, the expectation of increased interest rates.
Moreover, they are predicting positive changes in the private and public markets and increased cash levels from customers through investing.
After the financial report was revealed to the public, the stock price of SVB declined by 60% in March, as per research.
Because of this, the investors have been frustrated regarding the condition of the bank. On top of it, SVB has witnessed a decrease of another 23% post-trading by clients.
As per research, a statement revealed in March said that the chief of SVB told people to stay relaxed about the situation. He conveyed to the masses that they have a sufficient amount of liquidity for their customers.
Although, an issue will be created because of the rumors being spread in relevance to SVB being stuck in a problem.
By writing a letter, Becker confirmed the good health of SVB. He said that it has enough capital for customers.
He also added that SVB is one of the best banks for loans, and it is predicted to invest more capital through the selling of securities.
Tech Leaders Calm despite SVB’s Financial Concerns
People have been conversing about the impacts on the bank if customers look into the finances of SVB.
Although, there have been some who are supporting the bank. They shared posts on Twitter telling people to stay calm.
A Twitter user – Mark Suster – posted that the VC people should talk about it openly so that people get relaxed. He said that people should not rely on assumptions and rumors being spread by others.
Zak Kukoff is the principal of General Catalyst. He said that SVB has been there for its customers through thick and thin.
He added that people are forgetting all that the bank has done for businesses, and people should support the bank in times of difficulty. People have been more frustrated because Silvergate closed down its functions.
At the beginning of March, Silvergate announced that the reason behind closing down was due to the latest regulations and industry behavior.
Apparently, the bank – Silvergate – used to be one of the most prominent banks for several crypto businesses.
Although, there were some issues in relevance to their solvency after they revealed news about the delay of their annual report.
The report which was delayed by a couple of weeks had all the information regarding Silvergate’s financial health.
