American Silicon Valley Bank under pressure

This article was last updated on March 10, 2023

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American Silicon Valley Bank under pressure on Wall Street

The financial turmoil at American Silicon Valley Bank (SVB) is causing unrest in the financial markets, with share prices of banks in the US and Europe under pressure and falling.

SVB is a medium-sized bank that has become a significant financier of start-ups and venture capitalists in the tech industry. However, it is struggling with too little capital, losing billions on bond investments, and failing to raise new money. Interest rates have risen, leading to a threat of cash running out, and the bank incurred a loss of nearly $2 billion on the investment.

The bank wanted to raise additional capital from investors by issuing new shares, but investors were shocked and sold their shares, causing the stock price to plummet. Although some experts think that the panic on the stock market is not entirely justified, there is a risk of a bank run, which could have far-reaching consequences for large tech companies that have credit lines with SVB.

The impact on the European market would be less than expected. The share price of SVB remains uncertain, with experts predicting a short-lived blow.