Silicon Valley Bank (SVB) was once known as the go-to bank for tech startups and high-growth companies. But in March 2020, the bank collapsed, sending shockwaves through the tech industry and beyond. The fallout from SVB's collapse has led to investigations, stock sales by insiders, and losses for banks and investors.
Credit Suisse on Wednesday said it would borrow 50 billion Swiss Francs ($53.7 billion) from the Swiss National Bank. The move comes as banks around the world are struggling to cope with the economic impact of the COVID-19 pandemic. The collapse of Silicon Valley Bank has added to the challenges facing the banking industry, particularly in the tech sector.
Altogether, Silicon Valley Bank executives and directors cashed out of $84 million worth of stock over the past two years, according to an analysis by The Wall Street Journal. The stock sales have raised questions about insider trading and whether SVB executives knew about the bank's impending collapse.
Worried about Silicon Valley Bank contagion? Strategist Kenny Polcari says there are some 'very good' stocks out there getting slammed for no reason. In an interview with CNBC, Polcari said that while the collapse of SVB was concerning, it was not a reason to panic. He advised investors to look for undervalued stocks in the tech sector that had been unfairly punished by the fallout from SVB's collapse.
European markets closed sharply lower Monday as the fallout from the Silicon Valley Bank collapse sent banks to their worst day in more than a decade. The Stoxx Europe 600 Banks Index fell 10% on Monday, its biggest one-day decline since the financial crisis of 2008. The losses were led by Italian banks, which were already struggling with a weak economy and a high level of bad loans.
The probes are looking into the stock sales that SVB executives conducted ahead of the tech-focused bank's collapse. The investigations are being carried out by the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ). The DOJ is also investigating whether SVB executives misled investors about the bank's financial health.
CNBC's Robert Frank reports that in the months leading up to the collapse of Silicon Valley Bank, insiders at SVB and other regionals sold millions of dollars worth of stock. The sales were made at a time when the bank was reporting record profits and growth. The stock sales have raised questions about whether SVB executives knew about the bank's impending collapse and whether they took advantage of insider information to profit from it.
Regional bank leaders are snapping up shares of their companies' stocks, taking advantage of a selloff fueled by the fallout from Silicon Valley Bank's collapse. Bloomberg reports that executives at regional banks such as First Horizon National and Bank of Hawaii have been buying up shares of their own companies' stocks in recent weeks. The purchases are seen as a vote of confidence in the regional banking sector, which has been hit hard by the economic impact of the COVID-19 pandemic.
Stocks of high-growth technology companies with deposits at Silicon Valley Bank sold off after SVB was shut down by regulators. SVB was known for its focus on the tech industry, and many high-growth companies had deposits with the bank. When SVB collapsed, these companies were forced to find new banking partners, which led to a sell-off in their stocks.
Credit Suisse shares hit a record low after its biggest backer rules out more investment. The stock fell sharply after Saudi National Bank said it would not invest any more money in the Swiss bank. Credit Suisse has been struggling to cope with the economic impact of the COVID-19 pandemic, and the fallout from Silicon Valley Bank's collapse has added to its challenges.
Overall, the collapse of Silicon Valley Bank has had far-reaching consequences for the banking and tech industries. Investigations into insider trading and misleading investors have raised questions about the integrity of the financial system. Banks and investors have suffered losses, and high-growth tech companies have been forced to find new banking partners. While the fallout from SVB's collapse is concerning, it has also highlighted the need for greater transparency and accountability in the financial industry.
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