Banking problems in the US? Shares of Silicon Valley Bank plummeted 1 day after the fall of Silvergate

Fears for the future of another US bank have increased this week after Silicon Valley Bank (SVB) announced a significant asset and stock sale to raise additional capital.

However, some investors are concerned that all is not well at the tech startup and VC-focused bank, especially given the closure of crypto bank Silvergate just a day earlier. Shares in Silicon Valley Bank plunged more than 60%, wiping out about $80 billion worth of the bank’s stock.

SVB is one of the 20 largest banks in the United States, providing banking services to crypto-friendly venture firms Sequoia and Andreessen Horowitz (a16z).

In a March 8 financial update, it announced it had sold $21 billion worth of securities holdings for a loss of $1.8 billion to strengthen its balance sheet.

It also raised $500 million from venture capital firm General Atlantic and is seeking to raise another $1.75 billion from the sale of its shares to a total of $2.25 billion.

It said the sale was made because it anticipated “continued higher interest rates, stressed public and private markets and increased cash burn levels from our clients as they invest in their businesses.”

However, the release of the financials sent SVB’s share price down 60% on March 9, according to Google Finance, with investors worried about the bank’s financial position. It also saw a further 23% drop in after-hours trading.

The SVB’s five-day chart shows the sharp one-day price drop from about $265 to nearly $80 after closing on March 9. Source: Google Finance

According to a March 9 report from The Information, SVB chief Greg Becker told investors to “keep calm” and said the bank has “enough liquidity to support our clients, with one exception: if everyone tells each other that SVB is in the problem is” , that would be a challenge.”

In a letter to stakeholders, Becker reaffirmed that the bank was “well capitalized” and had “one of the lowest loan-to-deposit ratios of any bank of our size” and expected to reinvest the capital from the sale in “more asset-sensitive, short-term securities.

Many have shared concerns about the possible knock-on effect if SVB’s clients caused a bank run.

However, on Twitter, founders and tech executives expressed their support for the bank and urged others not to panic.

Mark Suster of Upfront Ventures tweeted on March 9 that “more in the VC community needs to speak out publicly to quell the panic about it [SVB].”

“I believe they can only fail if everyone panics, so I would insist on calm decisions based on facts,” he added.

Commenting on the news, Zak Kukoff, director of VC firm General Catalyst, said the bank was “consistently doing its best” for startups, saying “now is the right time to support them.”

Related: Silvergate’s demise sparks debate over whose fault it really was

The uncertainty over SVB comes just a day after Silvergate said it will “wind down operations” and liquidate its crypto-friendly bank.

In a March 8 announcement, Silvergate Capital Corporation said the decision to close operations was “in light of recent industry and regulatory developments.”

Silvergate has been one of the main banking partners for many crypto companies, but has become concerned about its solvency following an announcement that it would delay the filing of its annual 10-K report by two weeks. The document usually provides an overview of a company’s financial situation.