Peter Thiel’s Founders Fund has advised companies to pull money from SVB Financial Group‘s SIVB bank in the backdrop of concerns about its financial stability, reported Bloomberg, citing people familiar with the matter.
The firm told portfolio companies there was no downside to pulling their money from the bank, the report, said citing sources.
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Shares of SVB Financial Group closed 60.41% lower on Thursday and lost another 25.04% in extended trading after it announced the completion of sale of $21 billion of securities which will result in an after-tax loss of $1.8 billion in Q1 2023 and announced a plan to raise over $2 billion to stem losses from the bond sale.
Ratings agency Moody’s has downgraded the bank’s long-term local currency bank deposit, according to a Reuters report.
SVB said that funds raised from the stock sale will be re-invested in shorter-term debt and the bank will double its term borrowing to $30 billion.
“We are taking these actions because we expect continued higher interest rates, pressured public and private markets, and elevated cash burn levels from our clients,” SVBChief Executive Officer Greg Becker said in the letter.
Becker also held a conference call on Thursday advising the bank’s clients to “stay calm” amid concern about its financial position, the Bloomberg report said.
Price Action: U.S. markets ended in the red on Thursday dragged by a plunge in bank stocks following the developments surrounding SVB. The SPDR S&P 500 ETF Trust SPY closed 1.84% lower while the Invesco QQQ Trust Series 1 QQQ lost 1.73%.
Image and article originally from www.benzinga.com. Read the original article here.