Silicon Valley Bank’s spiral was set off by its surprise announcement Wednesday that it would take extraordinary and immediate steps to shore up its finances amid a dimming economic environment for the start-ups and other technology companies that dominate its client base. The bank disclosed that it had sold off $21 billion of its most liquid, or easily tradable, investments; borrowed $15 billion; and organized an emergency sale of its stock to raise cash.
Banks are loath to take any of those steps — let alone all three at once — and when they do, the moves are typically carefully choreographed. Silicon Valley Bank’s stock price plummeted 60 percent on Thursday as investors rushed to sell shares after the announcement.
Source: Silicon Valley Bank’s Financial Stability Worries Investors – The New York Times
