(AOF) – SVB Financial Group, whose stock fell 60% on the stock market yesterday, is expected to be in the red again today. The US bank launched a $2.25 billion capital increase on Thursday after posting a $1.8 billion after-tax loss on the sale of 21 billion shares. These disposals are intended to enable it to deal with a liquidity risk. Its balance sheet is weakened by the withdrawal of funds from its customers, mainly start-ups, in a context of rising interest rates.
These withdrawals could also continue.
According to Bloomberg, the venture capital firm Founders Fund of Peter Thiel, who is a co-founder of PayPal and an early investor in Facebook, and other industry players advised start-ups to withdraw their funds from SVB Financial Group.
AOF – LEARN MORE
The negative effects of rising interest rates
The rise in interest rates normally causes an increase in bank income through the loans granted. In Europe, according to a survey conducted by S&P among 85 banking establishments, the sector expects an average increase of 18% in its net interest income. However, this new inflationary context also has undesirable effects, in particular an increase in refinancing costs. It is also accompanied by the fear of a new recession, which would then affect all the bank’s businesses, ranging from loans to asset management, whose income is correlated to market valuations. Reassuring element: the banks of the euro zone are sufficiently solid to face a deterioration of their environment.