Shares in Silicon Valley Bank halted after a sharp fall
Trading in shares of Silicon Valley Bank was suspended on Friday as the US lender abandoned a $2.25 billion capital raising intended to cover recent losses in its bond portfolio.
SVB shares were halted before the official opening of trading on New York’s Nasdaq exchange. California-based SVB had hoped to price the $2.25 billion stock and convertible bond sale before the market opened, but has now halted its efforts, according to people with knowledge of the matter.
The company is exploring a potential sale, one of the people said.
SVB did not immediately respond to a request for comment.
New capital from the share sale would have helped bridge the roughly $1[ads1].8 billion in losses SVB incurred from the sale of around $21 billion of securities initiated to cover customers withdrawing deposits from the bank.
It planned to sell $1.25 billion of its common stock to investors and another $500 million of mandatory convertible preferred stock, which is slightly less dilutive to existing shareholders.
The banking group’s problems stem from a decision taken at the height of the technology boom to park $91 billion of its deposits in long-dated securities such as mortgage bonds and U.S. Treasuries, which were considered safe but are now worth $15 billion less than when SVB bought them after that the Federal Reserve aggressively raised interest rates.
On Thursday, SVB shares recorded their biggest ever decline, taking $9.6 billion off the banking group’s market value. SVB shares had been indicated to open down over 60 percent in pre-market trading before the halt was announced.
Additional reporting by Brooke Masters in New York