“Higher rates have also lowered the value of their treasury and other securities which SVB needed to pay depositors,” Zandi said. That prompted many tech firms to draw down the deposits they held at SVB to fund their operations. Higher rates hit tech especially hard, undercutting the value of tech stocks and making it tough to raise funds, Moody’s chief economist Mark Zandi said. But as the Fed raises interest rates to fight inflation, the value of those assets has fallen, leaving banks sitting on unrealized losses. When interest rates were near zero, banks loaded up on long-dated, seemingly low-risk Treasuries. Silicon Valley Bank’s decline stems partly from the Federal Reserve’s aggressive interest rate hikes over the past year. “That’s because its depositors were withdrawing their money so fast that the bank was insolvent, and an intraday closure was unavoidable due to a classic bank run.” “SVB’s condition deteriorated so quickly that it couldn’t last just five more hours,” wrote Better Markets CEO Dennis M. The mid-morning timing of the FDIC’s takeover was noteworthy, as the agency typically waits until the market has closed to intervene. Several other bank stocks were temporarily halted Friday, including First Republic, PacWest Bancorp, and Signature Bank. By Friday morning, SVB’s shares were halted and it had abandoned efforts to quickly raise capital or find a buyer. The company’s stock cratered on Thursday, dragging other banks down with it. That triggered a panic among key venture capital firms, who reportedly advised companies to withdraw their money from the bank.

The wheels started to come off on Wednesday, when SVB announced it had sold a bunch of securities at a loss and that it would sell $2.25 billion in new shares to shore up its balance sheet. The bank, previously owned by SVB Financial Group, didn’t respond to CNN’s request for comment. It said it would pay uninsured depositors an “advance dividend within the next week.” The FDIC, an independent government agency that insures bank deposits and oversees financial institutions, said all insured depositors will have full access to their insured deposits by no later than Monday morning. Here's why things are different this time Silicon Valley Bank collapse has echoes of 2008. SVB Financial Group shares extended their plunge before being halted in premarket trading for pending news as prominent venture capitalists recommended companies withdraw their money from the lender, sparking further worries over its financial health and liquidity in the wider banking sector.

An SVB Financial Group chart displayed on the floor of the New York Stock Exchange in New York, US, on Friday, March 10, 2023.

The bank that bust the world transcript