SVB in talks to sell itself; shares halted after tumbling 66% in premarket trading

SVB Financial Group’s efforts to lift cash have failed and the troubled financial institution was in talks to promote itself, CNBC reported on Friday, as a disaster on the tech-heavy lender rippled via world markets and hit banking shares.

Shares of SVB Financial Group had been halted on Friday after tumbling 66% in premarket buying and selling.

SVB, which does business as Silicon Valley Bank, was not instantly accessible for remark.

The brutal rout within the lender’s inventory which started on Thursday spilled over into different U.S. and European banks because the episode unfold concern about hidden dangers within the sector and its vulnerability to the rising value of cash.

The S&P 500 banks index dropped 6.6% on Thursday and was set to open decrease once more on Friday.

Europe’s STOXX banking index fell greater than 4%, set for its greatest one-day slide since early June, with declines for many main lenders, together with HSBC, down 4.5%, and Deutsche Bank, down 7.9%.

The disaster at SVB began earlier this week when the financial institution, which lends closely to tech startups, launched a share sale to shore up its stability sheet after promoting a portfolio consisting principally of U.S. Treasuries at a loss. Sources acquainted with the state of affairs mentioned on Thursday that some startups had suggested their founders to drag out their cash from SVB as a precautionary measure. The disaster underscored how quickly rising rates of interest had brought on the value of such bonds to fall, feeding investor considerations that different banks may additionally be weak. Earlier this month, the Federal Deposit Insurance Corp mentioned U.S. banks confronted a complete of about $620 billion in unrealized losses on their securities holdings on the finish of 2022.

But banking consultants mentioned SVB’s points had been distinctive and the troubles concerning the broader sector weren’t warranted.

“The knee-jerk reaction in the market to this risk event looks overdone. But rising costs of deposits and possible deposit withdrawals are likely to pressure sector earnings,” Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, wrote in a notice.

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