Recently, the S&P 500 Bank Index plummeted nearly 6%, the largest one-day drop in more than two years. I thought the market would recover after the plunge, but I never expected that when the cryptocurrency bank Silvergate announced that it would close, and Silicon Valley Bank After the crisis, the market panic was triggered. In order to ensure the safety of assets, investors sold a large number of financial stocks and fled the banking sector.
According to a JRP Securities Pty Ltd financial reporter, Silicon Valley Bank fell more than 60% after it announced that the sale of some securities in its investment portfolio would result in a loss of $1.8 billion and seek to raise $2.25 billion through the sale of common and preferred stock. Shares of the bank’s parent company, Silicon Valley Bank Financial Group, fell more than 20 percent during the session.
Silicon Valley Bank CEO Greg Becker said in a letter that he has sold most of the available securities and plans to raise $2.25 billion through common stock and convertible preferred stock to solve the next crisis.
The letter mentioned that the sale of securities will result in a loss of after-tax profits of US$1.8 billion, but it is sufficient to face this crisis, and it is expected to bring a three-month buffer time to help the company get out of the crisis.
Silvergate Capital fell more than 35% intraday after Silvergate previously announced that it would cease operations and voluntarily liquidate its subsidiary Silvergate Bank, which provides services to the cryptocurrency industry.
As the two companies plummeted, panic spread, triggering a sell-off in the financial sector, with the four largest U.S. banks losing $47 billion in market value in Thursday’s trading.
Among them, JPMorgan Chase’s stock price fell nearly 6%, with a market value loss of about US$20 billion; Bank of America fell 6.1%, with a market value loss of about US$15 billion; Wells Fargo fell 6.3%, and its market value decreased by US$8.5 billion; Citigroup fell 4.1%. Reduced by $3 billion.
The financial analyst of JRP Securities Pty Ltd pointed out that the rapid liquidity crisis of Silicon Valley Bank has frightened people, because Silicon Valley Bank is used as a warehouse of funds. If they all have problems now, the risks brought will sweep all investors. People will frantically transfer assets out, causing the bank itself to have a large area of shortage.
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source https://netdace.com/top-story/financial-stocks-plummeted-and-the-market-value-of-the-four-major-banks-shrank-by-nearly-50-billion/