Silicon Valley Bank shares halted after it pauses stock sale
US lender had sought to raise $2.25bn to cover losses in bond portfolio
Silicon Valley Bank shares registered their largest decline on record on Thursday © David Paul Morris/Bloomberg
Trading in shares of Silicon Valley Bank was suspended on Friday as the US lender abandoned a $2.25bn capital raising meant to cover recent losses in its bond portfolio.
SVB shares were halted before the official opening of trading on New York’s Nasdaq exchange. California-based SVB had hoped to price the $2.25bn share and convertible bond sale before the market open but has now paused the effort, according to people with knowledge of the matter.
The company is exploring a potential sale, one of the people said.
SVB did not immediately respond to a request for comment.
New capital from the stock sale would have helped bridge the roughly $1.8bn in losses SVB incurred from the sale of about $21bn of securities initiated to cover customers withdrawing deposits from the bank.
It planned to sell $1.25bn of its common stock to investors and a further $500mn of mandatory convertible preferred shares, which are slightly less dilutive to existing shareholders.
The banking group’s troubles stem from a decision made at the peak of the tech boom to park $91bn of its deposits into long-dated securities such as mortgage bonds and US Treasuries, which were deemed safe but are now worth $15bn less than when SVB purchased them after the Federal Reserve aggressively raised interest rates.
On Thursday, SVB shares registered their biggest-ever decline, wiping $9.6bn from the banking group’s market capitalisation. SVB shares had been indicated to open down more than 60 per cent in pre-market trading before the halt was announced.
Additional reporting by Brooke Masters in New York
