The shares of SVB Financial fell more than 60% on Thursday after the tech-focused bank said it plans to raise more than $2B in capital to help offset losses on bond sales.
Trading
in the stock was halted multiple times during the session for
volatility. SVB shares closed at $106.04, down ~60.4% for the day. SVP
fell an additional 22% in extended trading on Thursday.
- CEO
Greg Becker, in a letter, said the company has sold most of its
available-for-sale securities and is looking to raise $2.25B between
common equity and convertible preferred shares.
- The bank said it has already received a commitment of $500M from Investment General Atlantic.
- SVB said the sale of securities would result in a post-tax earnings loss of $1.8B.
- The bank plans to reinvest the proceeds from its sales into shorter-term assets.
- As of Dec. 31, SVB had $28.8B in available-for-sale securities on its balance sheet.
- The company also has $95.3B in held-to-maturity securities.
- SVB pointed to higher interest rates and “elevated cash burn from our clients” as reasons for the capital raise.
- SVP fell an additional 22% in extended trading on Thursday.
