SVB shares slump again as clients threaten to pull cash

SVB Financial Group shares sank as much as 47 per cent on Friday (Mar 10) as prominent venture capitalists recommended companies withdraw their money from the lender, sparking further worries over its financial health and liquidity in the wider banking sector.

The stock losses have now reached 79 per cent since the surprise announcement on Wednesday from the Santa Clara, California-based company that it was issuing US$2.25 billion of shares to bolster its capital position after a significant loss on its investment portfolio. The blow triggered a sharp sell-off in US banks, which tumbled on Thursday by the most in almost three years and extended losses in US premarket trading on Friday.

Adding to the bank’s woes, venture capitalists including Peter Thiel’s Founders Fund urged portfolio businesses to limit their exposure to SVB. Meanwhile, analysts cut their ratings on the stock, with Raymond James downgrading SVB to “market perform” and Truist Securities lowering it to “hold”, citing concerns over clients pulling funds and the pressure from higher interest rates.

“With the increasing risk of accelerated deposit outflows, we believe there is too much uncertainty to recommend the stock to investors,” Truist analyst Brandon King wrote in a note. BLOOMBERG