Research Brief: Financial Markets – March 2023

Prominent tech and venture capital bank closes. Silicon Valley Bank (SVB), the country’s 16th-largest bank, was seized by California state regulators on Friday, March 10 and placed into FDIC receivership in the largest banking collapse since 2008. Recent troubles in the technology and cryptocurrency sectors, of which SVB was a prominent financier, led to major deposit outflows at the bank, forcing the institution to sell bond holdings before their maturity to procure cash to cover these withdrawals. Due to the Federal Reserve’s rapid interest rate increases over the past 12 months, bond prices have fallen, and SVB realized a loss on those sales. When the bank next tried to fill a $2.25 billion shortfall with a stock sale, a wave of depositors worked to pull out their cash, at which point regulators stepped in.

Download