Everything you need to get caught up on the SVB crisis
By Editor - Thu Mar 16, 10:10 am
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On Friday, the Federal Deposit Insurance Corporation announced that it had taken over Silicon Valley Bank , and as we rushed to plan coverage, one of my colleagues succinctly described the situation: “This is historic shit.” A week later, we can all agree they were right. But a lot has happened, and unless it’s your job to edit the news, it’s possible you missed a slice of the saga, if not the entire story. Here’s what went down: How it started The drama kicked into high gear in the middle of last week: SVB’s shares fell over 60% on Wednesday evening, when the bank said that it planned to sell shares to raise capital after taking a $1.8 billion charge from the sale of some assets. The bank also indicated that it would boost its borrowing, reinvest capital into higher yielding assets, and take on more funding from an external entity. Given the recent failure of crypto bank Silvergate and SVB’s own troubles due to its exposure to the venture capital and startup ecosystem (which hasn’t been doing well), investors understandably got jittery and started selling SVB stock. Famously , on Thursday evening, SVB CEO Greg Becker said on a call with customers that the bank had “ample liquidity” to support its clients “with one exception: If everybody is telling each other that SVB is in trouble, that will be a challenge.” The executive asked VC clients to “stay calm.” He said, “That’s my ask. We’ve been there for 40 years, supporting you, supporting the portfolio companies, supporting venture capitalists.” We all know how that went.
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Everything you need to get caught up on the SVB crisis
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