Troubled tech bank Silicon Valley Bank (SVB) has officially announced it will file for a “Chapter 11 court-supervised reorganization” after trading in its shares was suspended for a week, and the FDIC must intervene.
This comes as Bitcoin rallies to multi-month highs of $27,000 before pulling back.
Source: TradingView
According to a filing with the U.S. Bankruptcy Court for the Southern District, the California-based bank outlined an update on its PR starting today.
SVB Financial Group said the funds and general partnerships of SVB Securities and SVB Capital were not listed in the bankruptcy filing. They continue to function “normally”.
“SVB Financial Group is no longer affiliated with Silicon Valley Bank or the bank’s private banking and wealth management business, SVB Private. The bank’s successor, Silicon Valley Bridge Bank, operates under the jurisdiction of the Federal Deposit Insurance Corporation (“FDIC”) and is not a Chapter 11 “Filing”.
SVB Financial Group announced that it has $2.2 billion in liquidity plus additional cash and interest from SVB Capital and SVB Securities, which it will use to explore “strategic alternatives”. Its debt is said to be $3.3 billion in the “gross principal amount of unsecured bonds.”
“The Chapter 11 process will enable SVB Financial Group to preserve value as it evaluates strategic options for its valuable businesses and assets, particularly SVB Capital and SVB Securities. SVB Capital and SVB Securities continue under their longstanding independent leadership teams operate and serve clients,” commented William Kosturos, head of restructuring at SVB Financial Group.
The bank exposed its problems last week when it announced the sale of billions of dollars in its investment portfolio, resulting in a $1.8 billion loss. When its stock price fell, the FDIC had to step in and halt trading.
Several other U.S. banks have since come under the spotlight for similar issues, with some regulators reportedly set to investigate SVB.
Recently, data showed that the Federal Reserve injected $300 billion into the financial world in just a few days. It is half of the liquidity captured by the Federal Reserve in 2022. During this period, quantitative tightening and interest rate hikes are in response to inflation. This is also the result of the Federal Reserve printing money to rescue the economy. The economy did not fall into the crisis caused by the COVID-19 epidemic in 2020-2021, which caused the money supply to increase from $4 trillion to almost $9 trillion in less than 2 years.
Nearly half of the Fed’s quantitative tightening efforts were wiped out in a week. pic.twitter.com/G7unsEEOKj
— tedtalksmacro (@tedtalksmacro) March 16, 2023
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