The S&P 500 bank index fell nearly 6% on Thursday, the most in over two years, as investors fled the industry in the aftermath of SVB Financial Group's share sale announcement and crypto bank Silvergate's decision to cease operations.
SVB shares, which include Silicon Valley Bank, fell more than 50% in their biggest one-day drop on record after the company announced a $1.75 billion share sale late Wednesday. SVB is dealing with cash burn as a result of declining deposits from startups suffering from a lack of venture capital funding.
First Republic, based in San Francisco, fell 15% after reaching its lowest level since October 2020.
The SPDR S&P regional banking ETF fell more than 7%, reaching its lowest level since January 2021.
Major US banks were also impacted, with JPMorgan and Bank of America both falling more than 5%.
The S&P 500's deepest percentage decliners in Thursday's trading session were First Republic and SVB, while JPMorgan's loss weighed more than any other stock on the S&P 500's 1.1% decline at midday.
"The Silicon Valley raise got everybody nervous about people's capital levels and what deposits are doing. A lot of institutional investors don't feel great about owning certain banks right now," said R.J. Grant, head of trading at Keefe, Bruyette & Woods in New York.
"It just gets people freaked out because Silicon Valley, historically has been a very strong, well-run bank. If they're having issues right now, people are wondering what about other banks that are lesser quality and that don't have the reputation that Silicon Valley Bank has."
Investors were also concerned about the decline of cryptocurrency-focused lender Silvergate Capital, which fell 22% after announcing late Thursday that it planned to wind down operations and voluntarily liquidate after suffering losses as a result of the collapse of crypto exchange FTX.
(Source:www.theglobeandmail.com)
SVB shares, which include Silicon Valley Bank, fell more than 50% in their biggest one-day drop on record after the company announced a $1.75 billion share sale late Wednesday. SVB is dealing with cash burn as a result of declining deposits from startups suffering from a lack of venture capital funding.
First Republic, based in San Francisco, fell 15% after reaching its lowest level since October 2020.
The SPDR S&P regional banking ETF fell more than 7%, reaching its lowest level since January 2021.
Major US banks were also impacted, with JPMorgan and Bank of America both falling more than 5%.
The S&P 500's deepest percentage decliners in Thursday's trading session were First Republic and SVB, while JPMorgan's loss weighed more than any other stock on the S&P 500's 1.1% decline at midday.
"The Silicon Valley raise got everybody nervous about people's capital levels and what deposits are doing. A lot of institutional investors don't feel great about owning certain banks right now," said R.J. Grant, head of trading at Keefe, Bruyette & Woods in New York.
"It just gets people freaked out because Silicon Valley, historically has been a very strong, well-run bank. If they're having issues right now, people are wondering what about other banks that are lesser quality and that don't have the reputation that Silicon Valley Bank has."
Investors were also concerned about the decline of cryptocurrency-focused lender Silvergate Capital, which fell 22% after announcing late Thursday that it planned to wind down operations and voluntarily liquidate after suffering losses as a result of the collapse of crypto exchange FTX.
(Source:www.theglobeandmail.com)