Another US Bank on the Brink of Collapse

Rumored liquidity issues currently being experienced by Silicon Valley Bank due rumors it borrowed money debt to get more money and simultaneously selling stock investment at a loss.

A wave of withdrawals has caused the liquidity issues, according to analysts, with numerous crypto project founders reporting that they were unable to access their Silicon Valley Bank accounts as the bank kept citing technical issues.

Several crypto investment funds have requested that projects in their portfolio withdraw funds from Silicon Valley Bank with Pantera Capital, Eden Block, Mechanism Capital and two unnamed firms confirmed the facts.

As the 16th largest commercial bank in the US, with 209 billion USD in assets by the end of 2022, Silicon Valley Bank announced on March 9 the sale of $21 billion in securities at a $1.8 billion loss. The bank’s parent company, in order to compensate, intends to issue $1.75 billion in stock which it has agreed to sell $500 million to the General Atlantic Fund.

Almost $80 billion in market value has been wiped out as the SIVB stock share price fell another 60% as the bank announced its stranded. Looking back the issues begun in 2021 when the bank saw significant growth in client deposits from $61.7 billion to $189 billion.

Long term mortgage-backed securities (MBS) to assure profitability was where Silicon Valley Bank agreed to spend $80 billion however, when the Fed raised interest rates in 2022 MBS securities dropped drastically due to market participants moving to buying US government bonds instead.