2023-03-15
Silicon Valley Bank was founded in 1983. It went public on the Nasdaq stock exchange in 1988. Its share price started trading at $0.87 a share, the share price went highest to $700 a share. SVB stock had 80,000 percent gained. Before the bank collapse, SVB is the 16th largest bank in the US. SVB executives and directors sold $84 million worth of stock in the past two years. Silicon Valley Bank CEO Greg Becker alone sold nearly $30 million, including $3.6 million worth of share he sold on February 27 ,2023.
How the collapse of SVB began?
At the fourth quarter of 2022, Moody’s
downgraded the credit rating of SVB Financial Group, parent company of SVB. The
value of long-term bonds that SVB held decrease due to higher interest rates. Becker sold 12,451 SVB shares worth $3.6 million on February
27, 2023. On March 8, 2023 SVB sold its long-term
bond portfolio worth $21 billion. The sale made SVB loss $1.8 billion. SVB tried to compensate $1.8
billion loss by proposed
public offering of $1.25
billion of common stock and also proposed public offering for preferred stock. On March 9, 2023 SVB's customers withdrew $42 billion from their bank
accounts. This event triggerred the largest bank run in the US history which
finally led to the shutdown of SVB by order of the California Department of Financial Protection and
Innovation.
