There was a lot of sell-off on Friday after SVB disclosed a loss of $1.8 billion in its bond portfolio and was put into receivership. This eclipsed a positive report on jobs in the United States. The FTSE 100 fell 1.7%.
The bank’s closure comes after it was forced to raise capital after losing $1.8 billion selling its bond portfolio at a loss to meet demands for cash from depositors.
Investors now worry about the vulnerability of banks, fearing the same problems that led to the 2008 financial crisis. However, they are now also assessing the possibility that the Fed may not raise interest rates at its next policy meeting on March 21-22.
The FTSE 100 fell 2.0% this morning amid uncertainty, weighed down by banking stocks.
HSBC said it will acquire the UK subsidiary of SVB for 1 pound, as it is an important lender to technology startups in Great Britain.
Meanwhile British American Tobacco fell 2.7% after JP Morgan downgraded its recommendation to “neutral” from “overweight”.
Things to read today:
SVB’s Failure Exposes Lurking Systemic Risk of Tech’s Money Machines (Bloomberg)
Goldman Expects No March Fed Rate Hike After SVB Collapse (Forbes)
Silicon Valley Bank: the banker’s spectacular breakup of the tech industry (Financial Times)
