TODAY market ANG ANG due to this SVB black swan event.
WHAT HAPPEN? Read the below:
SVB Collapsed in 48 hours: a Timeline
What is SVB? Founded in 1983, Silicon Valley Bank(SVB) specialized in banking for tech startups. It provided financing for almost half of US ventured-backed technology and health care companies. It was relatively unknown outside of Silicon Valley but ranked amongst top 20 largest American commercial banks.
What is SVB?Why did it fail? in short: a perfect storm
Why did it fail?1) Federal Reserve aggressive rate hike increased borrowing costs and slowed the momentum of tech stocks
2) The rate hike also meant that SVB's portfolio of long term bonds value were heavily eroded.
3) Venture capital has been reluctant to invest, forcing startups to draw down funds held by SVB.
Timeline:
Timeline: 8th March
: SVB announced it had sold its bond holdings at a loss, and will sell $2.25 billion in new shares to shore up its balance sheet.
Venture capital firms panicked and advised clients to withdraw money from the bank
9th March: SVB shares dropped 60% during trading, other bank shares were down as well as investors fear repeat of 2008 financial crisis.
10th March: Trading in SVB shares halted. California regulators intervened and shut down SVB. SVB was then placed under receivership under the Federal Reserve Deposit Insurance Corporation.
12 March: Regulators has created a backstop for all uninsured deposits at Silicon Valley Bank. Such a move will greatly limit the possible contagion from SVB spilling over to other banks.
12 March:Source: CNN.com:10 March 23; CNBC.com: 12 March 23