Silicon Valley Bank employees received their annual bonuses on Friday just hours before the government took control of the company, according to Fox Business.
The Santa Clara, California-based band collapsed last week and is now under the control of federal regulators.
SVB had been the 16th-largest bank in the U.S. prior to the bank run that led to its downfall.
The bank held a reputation as a go-to for a number of Silicon Valley industries and startups.
Y Combinator, an incubator startup that launched Airbnb, DoorDash and DropBox, regularly referred entrepreneurs to them.
SVB’s collapse was so quick that, hours before its closure, some industry analysts were hopeful that the bank was still a good investment.
The bank’s shares had fallen by 60% on Friday morning after a similar drop the day before.
Anxious depositors rushed to withdraw their money over concern for the bank’s health, causing its collapse, which may serve as “an extinction-level event for startups,” according to Y Combinator CEO Garry Tan.
Entrepreneur and Dallas Mavericks owner Mark Cuban called for federal regulators to buy out the bank earlier on Friday.
“The Fed should IMMEDIATELY buy all the securities/debt the bank owns at near par, which should be enough to cover most deposits,” Cuban wrote as part of a lengthy Twitter chain last week. “Any losses paid for in equity and new debt from the new bank or whoever buys it. The Fed knew this was a risk. They should own it.”
SVB traditionally processes annual bonuses on the second Friday of March, unnamed sources associated with the bank told CNBC.
The bonuses were reportedly for work completed in 2022.
Banking News: Wall Street Banks Face Distress
Silicon Valley Bank (SVB) isn’t the only bank experiencing serious distress.
Wall Street banks lost $55 billion in just one day last week.
Four of America’s biggest banks lost a combined $55 billion of market value in a single day as financial stocks plunged.
US bank shares took a beating Thursday amid fears of contagion effects from the turmoil at Silicon Valley Bank and Silvergate.
JPMorgan saw the biggest tumble in market value among US lenders, losing $22 billion.
(Markets Insider) JPMorgan Chase, Bank of America, Wells Fargo and Morgan Stanley – the four most valued US lenders – saw $55 billion wiped off their combined market capitalization on Thursday, Refinitiv data show.
JPMorgan, the biggest US bank, alone saw a $22 billion tumble in its market value as its stock slid 5.41% to $130.34.
Wall Street’s Bank of America lost $16.16 billion as its share price fell 6.20% to $30.54.
Wells Fargo and Morgan Stanley saw their market capitalization drop by $10.3 billion and $6.2 billion, respectively.
Credit Suisse Bank Sees Billions in Withdraws
Credit Suisse (NYSE:CS) clients have withdrawn billions of dollars in the past several months.
In November, the bank warned investors in a 6-K filing of potential losses due to naked short covering, which as scared investors from losing most if not all of their money.
Credit Suisse also took a massive hit of $4.09 billion in Q3 and hinted at occurring losses in an upturn in markets.
This has fueled widespread withdraws from the bank leading it to borrow money.
The bank hired 20 banks for a $4 billion injection in effort to pivot from Q3’s disaster.
Credit Suisse has postponed publication of its annual report after a last-minute call from the United States Securities and Exchange Commission (SEC), which raised questions about its earlier financial statements.
The unusual intervention by the U.S regulator is the latest blow to Credit Suisse as it attempts to rebuild investor confidence after a series of scandals and setbacks that have sent its shares plunging and led clients to withdraw billions.
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