Collapse of banks on Wall Street due to fears generated by the expansion of SVB

Collapse of banks on Wall Street due to fears generated by the expansion of SVB

FILE PHOTO: A Wall Street sign in New York, U.S. November 8, 2021. REUTERS/Brendan McDermid

By Sinéad Carew

March 9 (Reuters) – The S&P 500 banking index plunged 7.5% on Thursday in its biggest one-day drop in more than two years as investors fled the sector following the news of the stock market listing. shares of the SVB Financial group and the decision of the crypto bank Silvergate to close its operations.

Shares of SVB, whose operating segments include Silicon Valley Bank, plunged more than 60% in the steepest ever one-day drop after the company announced a stock sale worth $100 on Wednesday night. $1.75 billion.

SVB is struggling with cash burn due to declining deposits from startups facing a shortage of venture capital funding.

The San Francisco-based First Republic fell 16.5% after hitting its lowest level since October 2020.

The SPDR S&P regional banking ETF fell more than 8% to its lowest level since January 2021.

Major US banks were also affected, with JPMorgan and Bank of America falling more than 5% and 6% respectively.

First Republic and SVB were the biggest percentage losers from the S&P 500 in Thursday trading, while JPMorgan’s loss topped any other stock in the S&P 500’s 1.85% decline.

“The rise of Silicon Valley has made everyone nervous about people’s capital levels and what deposits are doing. A lot of institutional investors don’t feel very good about owning shares of certain banks right now,” said RJ Grant, head of trading at Keefe, Bruyette & Woods in New York.

“People are freaking out because Silicon Valley has always been a very strong, well-run bank. If they’re having trouble now, people are wondering what happens to other banks that are lesser quality and haven’t the reputation of the Silicon Valley. Bank”.

Investors also had to deal with the fall of Silvergate Capital, a cryptocurrency-focused lender, which fell 22% after saying late Thursday that it planned to scale back its operations and a voluntary liquidation after suffering shocks. losses after the collapse of the FTX. cryptocurrency exchange.

Shares of Signature, in the same industry as Silvergate, fell 9.3%.

(Reporting by Sinéad Carew and Lance Tupper; additional reporting by Noel Randewich in Oakland, Calif.; Editing by Andrew Heavens and Nick Zieminski, Spanish editing by Tomás Cobos)

Melissa Galbraith
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