SVB Files for Chapter 11, The First Republic Crashes Again on Wall Street by Investing.com
By Geoffrey Smith
Investing.com — SVB Financial Group (NASDAQ::), the parent company of Silicon Valley Bank, has filed for Chapter 11 bankruptcy a week after US financial regulators intervened in emergency measures to secure the system.
SVB said it filed a court-supervised voluntary reorganization under Chapter 11 in the US Bankruptcy Court for the Southern District of New York to “preserve value,” noting that the funds and general partner entities of SVB Securities and SVB Capital “are not included in the Chapter 11 filing” and ” Carry on with business as usual.”
He added that Aqd “will continue to search for strategic alternatives to these activities.”
Meanwhile, the Silicon Valley bank itself is no longer within the group’s periphery: assets and liabilities were moved to a new bridge bank last week, after regulators took over to avoid a leak.
Remember, the bank was hit by an influx of deposits that forced it to liquidate government bonds at a loss of $1.8 billion, news that prompted more and more depositors – mostly corporations – to withdraw money from the bank.
Efforts by the Federal Reserve, the Federal Deposit Insurance Corporation, and the Treasury Department to find a buyer for the bank failed, despite a promise to honor all of its deposits. Earlier this week, it was reported that the Fed and the FDIC were planning a new bid to sell the bank, while other reports indicated that various venture capital groups, with possible backing from Apollo Global Management (NYSE: APO), were considering buying some operations. .
The bank’s collapse was the second-largest ever in the United States, beaten only by the failure of Washington Mutual in 2008, which sparked a crisis of confidence among small and medium-sized American banks, especially those based on the West Coast and high-profile banks. Learn about the world of startups and other corporate clients.
Seen as the next domino to fall, First Republic Bank (NYSE:FRC) was pressured again in trading Friday, dropping more than 20% despite news Thursday night of a consortium deal. led by major US banks. to deposit $30 billion in Swiss francs, effectively replacing most of the money clients have withdrawn in recent weeks.
Over the past month, FR shares have lost about 80% of their capitalization.
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