Silicon Valley Bank Financial, the publicly traded holding company of Silicon Valley Bank, has negotiation on hold this morning pending an announcement. The latest, from the typically reliable market tracker Deltaone, is that it sent a memo to employees advising them to work from home until further notice as they engage in “conversations to determine next steps for the bank”.
The notice follows a CNBC report earlier today that the company is in talks to sell itself.
The developments are the latest troubling turns for the tech-focused lender in what has been a surprising and precipitous downfall.
SVB — THE bank for many Silicon Valley startups and other powerful players in the industry – has been plagued with a number of issues, all in quick succession: rising interest rates, rising losses, communicating its state of bargains at the market and, more recently, a run on the bank, with a rush of customers withdrawing their money.
Shares of Silicon Valley Bank Financial fell 60% on Thursday.
CNBC did not identify the buyer. He reports that Silicon Valley Bank tried to raise funds from investors before exploring the sale, but was unsuccessful. No official word from the company.
The California-based lender spooked many of its customers on Wednesday after announcing plans to offer $1.25 billion of its common stock to investors and an additional $500 million of mandatory convertible preferred stock. General Atlantic said it had agreed to buy $500 million of the bank’s common stock in a separate private transaction, although that is contingent on the common stock offering closing, in accordance on file with the SEC. We contacted General Atlantic to ask for the latest status of this $500 million commitment.
From the start, it seemed like a lot of SVB’s misfortunes stemmed from how SVB badly mishandled its news: namely, it released its plans to sell common stock just as another bank – the crypto bank Silvergate – announced it was closing and liquidating. In support of this, a call from its CEO Greg Becker yesterday to calm the market repeatedly pointed to the company’s liquidity and strong position.
However, more recent reports indicate unease behind the scenes for months over the state of SVB. Greenoaks warned holding companies in November of the bank’s situation, according to a Bloomberg report. Some 12 of its portfolio companies had collectively withdrawn about $1 billion from SVB in recent months.
And as Connie pointed out yesterday, Silicon Valley Bank’s failure to diversify its business lately was a hidden problem in plain sight, exacerbated not only by the current state of the economy , but by the massive slowdown that has hit technology. sector — SVB’s bread and butter — in particular.
More to come, please refresh to update.