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Trading in shares of Silicon Valley Bank (SVB) has been suspended, as the firm’s scramble to raise money provokes fears of wider problems in the banking industry.
Markets are waiting for an announcement from the bank, which sparked panic after saying it would need to raise $2.25bn (£1.9bn) to plug a loss caused by the sale of assets affected by higher interest rates.
Shares in the firm tumbled overnight.
Bank shares globally were also hit.
SVB, headquartered in California, is a key lender to technology firms. Its shares saw their biggest one-day drop on record on Thursday as they plunged by more than 60% and lost more in after-hours trade.
The falls came after SVB said it was trying to raise funds after losing around $1.8bn when it offloaded a portfolio of assets, mainly rate-sensitive US government bonds.
The turmoil prompted some companies to rush to withdraw their deposits, adding to the bank’s financial pressures.
The company is now exploring a sale after investors balked at its effort to raise money by selling shares, CNBC said, citing anonymous sources.
SVB did not respond to a request for comment immediately.
A crucial lender for early-stage businesses, SVB is the banking partner for nearly half of US venture-backed technology and healthcare companies that listed on stock markets last year.
Speaking in Washington on Friday, US Treasury Secretary Janet Yellen said she was monitoring “recent developments” at Silicon Valley Bank and others “very carefully”.
“When banks experience financial losses, it is and it should be a matter of concern,” she said.
Concerns that other banks could face similar problems led to widespread selling on Thursday and early Friday.
The four largest US banks lost more than $50bn in market value on Thursday, while shares of banks in Asia and Europe fell sharply on Friday.
Russ Mould, investment director at AJ Bell, said the ripple effect of the problems at SVB showed these sorts of events “often hint at vulnerabilities in the wider system”.
“The fact SVB’s share placing has been accompanied by a fire sale of its bond portfolio raises concerns.
“Lots of banks hold large portfolios of bonds and rising interest rates make these less valuable – the SVB situation is a reminder that many institutions are sitting on large unrealised losses on their fixed-income [bond] holdings.”
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